Unit 4 Flashcards
pertains to the quantity of goods or services that people are ready to buy at a given time, price, and place.
Demand
It states that if a price goes up, the quantity demanded will go down. Conversely, if the price goes down, the quantity demanded will go up.
Law of Demand
a table that shows the quantity demanded of a good or service at different price levels.
DEMAND SCHEDULE
the graphical representation showing the relationship between price and quantities demanded per period.
DEMAND CURVE
A demand curve has a negative slope; thus, it slopes _____
downward from left to right.
The downward slope indicates the _______ relationship between price and quantity demanded.
inverse
If the demand curve shifts to the right, it means the demand ________;
if it shifts to the left, the demand _______.
right - increases
left - decreases
Formula for Quantity Demand
QD= a-bP
Formula of QD - Parts
QD= a-bP
QD- Quantity Demanded – Dependent Variable
P- Price - Independent variable
a- Intercept - Given
b- Slope - Given
QD is missing
QD = a-bP
Price is missing
P = a-QD/b
FACTORS CAN CAUSE THE DEMAND CURVE TO SHIFT TO THE RIGHT OR SHIFT TO THE LEFT
- Taste/Preferences
- Changing Incomes
- Population Change
- Substitute Goods
- Complimentary Goods
- Price Expectations
The demand for goods and services increases when people like or prefer them. Such taste/preferences are greatly influenced by trends, fashion, and advertisements
- Taste/Preferences
Increasing incomes of households raise the demand for specific goods or services. Usually, people buy more goods when their income increases.
o Normal Goods
o Inferior Goods
- Changing Incomes
an increasing population leads to an increase in the demand for goods or services.
- Population Change
are goods that are interchanged with another good; are generally offered at a lower price, which makes it more attractive for buyers.
- Substitute Goods
these are the goods that you cannot consume without the other goods.
- Complimentary Goods
if buyers expect the price of a good or service to rise (or fall) in the future, it may cause the current demand to increase (or decrease).
- Price Expectations
pertains to the quantity of goods or services that firms are ready and willing to sell at a given time, price, and place.
Supply
If Demand is the consumer’s willingness to ________;
Supply is the willingness of suppliers or producers to _________ goods or services at a given price.
consume
produce or sell
which states that if the price of a good or service goes up, the quantity supplied for such good or service will also go up; if the price goes down, the quantity supplied also goes down.
LAW OF SUPPLY
a graphical representation showing the relationship between the price of the product or factor of production and the quantity supplied per period.
SUPPLY CURVE
The upward slope shows the _______ relationship between the price and quantity.
positive
In Supply Curve Shift, if it shifts to the right, the supply _______, and if it shifts to the left, the supply _______.
increases
decreases
FACTORS CAN CAUSE THE SUPPLY CURVE
TO INCREASE OR DECREASE.
- Technology
- Price of Resources
- Prices of Other Goods
- Number of Sellers
- Weather Conditions
- Taxes and Subsidies
this refers to the techniques or
methods of production
- Technology
this is the cost of
production.
- Price of Resources
the changes in the price
of goods affect the total supply.
- Prices of Other Goods
more sellers of more
factories, means an increase in supply; smaller numbers of sellers or
factories mean less supply.
- Number of Sellers
Bad weather, such as typhoons, drought, or
natural disasters, reduces agricultural products’
supply while good weather has an opposite
impact.
- Weather Conditions
most subsidies can reduce the cost of
production while certain taxes can increase the
cost of production.
- Taxes and Subsidies
Formula for QS
QS = c+dP
Formula for P in QS
P = c+QS/d
is the state of balance between demand
and supply. It is the buyer and seller’s general agreement
at a particular price and a particular quantity.
Equilibrium
the meeting of supply and demand in a market.
MARKET EQUILIBRIUM
The price agreed by the seller to offer its good or service
for sale and for the buyer to pay for it
EQUILIBRIUM MARKET PRICE
Specifically, it is
the price at which the quantity demanded of a good is
precisely equal to the quantity supplied. This mutually
desired amount is called the
equilibrium quantity
FORMULA
Equilibrium:
Qd = Qs
