unit 2 supply & demand Flashcards
incentives
benefits or cost of action that influence peoples decison and behavior
Ceteris Paribus
all other things being equal
supply
amount of a resource available to give
demand
consumers desire and willingness to buy a product or service at a given period over time
law of supply
increase in price results in increase of product or service.
law of demand
consumers will get more at a lower price
Quantity Demanded
price is the factor
Quantity Supplied
number of goods or services that suppliers will produce and sell at a given market price.
Equilibrium Price (aka market-clearing price)
a balance of demand and supply
Equilibrium Quantity
no shortage or surplus of a good in the market
Demand Curve (Schedule–Individual and Market)
graph that shows how demand changes with price.
Supply Curve (Schedule–Individual and Market)
graph that shows how a change in price of a good/service affects the quantity a seller supplies.
marginal benefit
additional benefit you get from one more unit
price control
government regulation about maximum price of a good
surplus
amount of something left over (having extra of a good)
shortage
not having enough of a good
dead weight loss
difference in production and consumption
quantity control
checks products for accuracy
Tariffs/Taxes/Subsidies impact
Tariffs: taxes on imported goods
Taxes: percent of a price of good (fee)
Subsidies impact: payment made to firms/consumers to encourage increase in output
demand price
price people are willing to pay for goods and services when particular amount or quantity is available
supply price
lowest price at which a given amount will be offered under given conditions
Determinants of Demand
5 factors that effect demand: price, income, price of related goods, complimentary purchase , taste or preferences, subsities
Determinants of supply
technology, number of suppliers, suppliers expecations, feedbacl from consumers, increased tax, high wage
Elasticity (of Demand/of Supply/Price/Cross Price/Income)
an economic concept used to measure the change in the aggregate quantity demanded of a good or service in relation to price movements of that good or service
elastic
inelastic
when the demand of a product does not change as much as the price
income Effect
change in demand based on what consumers can afford
Substitution Effect
decrease in sales due to buying the cheaper alternative
related goods
subsitutes or compliments of a good
law of diminishing Marginal utility
for every additional unit you buy the less satisfaction you recieve
total revenue
amount pf money brought in from selling goods and services
total expenditure
The sum of the price paid for one or more products or services multiplied by the amount of each item purchased.
