Topic 1 Flashcards
An individual’s____ for a good or a service is measured as the amount of money he or she is willing to pay for it.
Value
An individual’s value for a good or a service is measured as the amount of money he or she is_____
willing to pay for it.
To “value” a good means that you ____
want it and can pay for it
Formally, the difference between the agreed-on price and the seller’s value is called_____
Seller Surplus
Formally, the difference between the___ and the___is called seller surplus.
agreed-on price
seller’s value
______ is the buyer’s value minus the price.
Buyers Surplus
Buyer surplus is the___ minus the___.
buyer’s value
Price
If one person makes money, someone else must be losing out is known as____
zero-sum fallacy
A_____ is a regulation that allows trade only at certain prices.
price control
_____ is price controls that outlaw trade at prices above the ceiling.
Price Ceiling
____is price controls that outlaw trade at prices below the floor.
Price Floors
The_____consumers demand (purchase) more as price falls (i.e., demand curves slope downward), assuming other factors are held constant.
First law of demand
To describe the buying behavior of a group of consumers, we add up all the individual demand curves to get an_____.
aggregate demand curve
A demand curve for which quantity changes more than price is said to be____, or sensitive to price
Elastic
A demand curve for which quantity changes less than price is said to be____, or insensitive to price.
Inelastic
___ measures the change in demand arising from changes in income
income elasticity of demand
What does positive elasicity means?
Income & Demand Increases
What does negative elasicity means?
demand will decrease when price increases
a good whose demand increases when price of another good increases.
Substitue
Subsitute example?
Coca/Pepsoi
a good whose demand increases when the price of another good decreases.
Complement
Complement example?
Hamburger/Buns
_____ is a simple two-step procedure that tells you whether a given price increase,
Stay-even analysis
The change in quantity demanded in response to change in price is known as____?
Movement along the demand curve
An_____ is something that affects demand that a company cannot control.
uncontrollable factor
______a change in demand caused by any variable except price. If demand increases (shifts up and to the right), consumers demand larger quantities of the good at the same price. If demand decreases (shifts down and to the left), consumers demand lower quantities of the good at the same price. Shifts are caused by factors like advertising, changes in consumer tastes, and product quality changes.
Shift of he demand curve
____ describe the behavior of a group of sellers and tell you how much will be sold at a given price.
Supply Curves
A change in supply caused by any variable except price is known as?
Shift of the supply curve
The market equilibrium is the price at which quantity supplied equals quantity demanded?
Market equilibrium
