Tutorial 1 Flashcards
Positive statements
are descriptive. They make a claim about how the world is
Normative statements
are prescriptive. They make a claim about how the world ought to be
quanity demanded
the amount of a good that buyers are willing and able to purchase.
normal good
a good for which, other things being equal, an increase in income leads to an increase in quantity demanded
inferior good
a good for which, other things being equal, an increase in income leads to a decrease in quantity demanded
substitutes
two goods for which a decrease in the price of one good leads to a decrease in demand for the other good.
complements
two goods for which a decrease in the price of one good leads to an increase in the demand for the other good.
price
represents a movement along the demand curve
Income
shifts the demand curve
Prices of related goods
shifts the demand curve
tastes
shifts the demand curve
expectations
shifts the demand curve
number of buyers
shifts the demand curve
demand curve
a graph of the relationship between the price of a good and the quantity demanded
quantity supplied
the amount of a good that sellers are willing and able to sell
supply curve
a graph of the relationship between the price of a good and quantity supplied
price
represents a movement along the supply curve
Input prices
shifts the supply curve
Technology
shifts the supply curve
Expectations
shifts the supply curve
Number of sellers
shifts the supply curve
equilibrium
a situation in which supply and demand have been brought into balance
equilibrium price
the price that balances quantity supplied and quantity demanded
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
surplus
a situation in which quantity supplied is greater than quantity demanded
shortage
a situation in which quantity demanded is greater than quantity supplied
elasticity
a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants
price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good, calcuated as the percentage change in quantity demaned divided by the percentage change in price.
the excess supply
quantity supplied would exceed quantity demanded
an excess demand
quantity demanded would exceed quantity supplied.
