Unit 4 Study Guide Flashcards
Law of Supply
As the price goes up, the quantity supplied also goes up. As the price goes down, quantity suppplied also goes down.
What is PENTI?
The demand shifters.
What does PENTI stand for?
Price of related goods, Expectations, Number of consumers, Tastes and preferneces, Income
Demand
The willingness and ability of consumers to buy goods and services at different prices.
Law of Demand
As prices increase, quantity demanded decreases, and vice versa.
Supply
The willingness and ability of producers to make and sell goods and services at different prices.
Price of Related Goods
Subsitutes and Complementary goods.
Substitutes
“Opposites”. People will buy either or.
Complementary
Goods that go together. If you buy one, you’ll buy the other.
Expectations
What’s happening in the future?
Number of Consumers
How many people are buying?
Tastes and Preferences
What people like or prefer, what is popular.
Income
How much money people have. Normal and inferior goods.
Normal Goods
(Exspensive, brand name.) When people have more moeny, demand goes up. Less money, demand goes down.
Inferior Goods
(Generic, cheap, off-brand.) When people have more money, demand goes down. Less money, demand goes up.
What is P.E.N.T.I.G?
The supply shifters.
Price of Inputs
The resources that go into making a product or service. (Land, Labour, Capital)
Expectations
Future Prices.
Number of Producers
Amount of businesses selling the product.
Technology
Improvements in technology will increase supply.
International Conditons
War and natural disaster.
Government Policy
Subsidies, Taxes, Quotas
Subsidey
Increase in government spending. government gives businesses money. Increase in supply.
Taxes
Decrease in supply.
Quotas
Decrease in supply.
Equilibrium
How prices are set in the market by both buyers and sellers. Quantity demanded equals quantity supplied.
What does P.E.N.T.I.G. stand for?
Price of Inputs, Expectations, Number of producers, Technology, International Conditons, Government Policy.
Price floor
Government Legislated minimum
Price Ceiling
Government legislated maximum
