Unit 2: Microeconomics - PT 1 Flashcards
Demand
The quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period
Demand Curve
A curve showing the relationship between the quantities of a good consumers are willing and able to buy during a particular time period
Competitive market
A market composed of many buyers and sellars acting independently, none of which whom has any ability to influence the price of the product
The LAW of Demand
If price increases - demand decreases
If price decreases - demand increases
Negative Casual Relationship
A relationship between two variables in which an increase in the value of one causes a decrease in the value of the other
Non-Price Determinants of Demand
P.I.N.T. P - Price of related goods I - Income (inferior goods and normal goods) (inferior have an inverse relationship, normal are complimentary) N - Number of buyers in the market T - Taste and preferences
Movement
Change in price
Shift
Change in P.I.N.T, or R.O.T.T.E.N.
Positive Casual Relationship
Moves in the same direction
Two ways to show supply
Supply schedule, graph
Supply
Indicates the various quantities of a good that firm(s) are willing and able to produce and sell during a particular time period
If price… then supply…
If price increases then supply increases, if price decreases then supply decreases
When demand is high, and supply is low…
price will increase
Non-Price Determinants of Supply
R.O.T.T.E.N.
R - Resource cost and availability (F.O.P.^, C.O.P.^, profits decrease, supply decrease)
O - Other goods prices
T - Taxes, subsidies and government regulations
T - Technology
E - Expectations of producers: if the producer expects the price to ^ they will hold off, if price decreases they will sell all)
N - Number of suppliers/producers
Equilibrium
A situation in which opposing forces balance each other. (equ. price and equ quantity)
