Week 4a Flashcards
(36 cards)
What is a competitive market?
Large number of buyers and sellers where no single buyer or seller can influence the price free product.
What is demand?
The various quantities of a good or service that people will be willing and able to buy at various prices over a period of time
What is individual demand
How much you want to buy of a good at a given price
What is market demand?
How much each individual buys at a given price all summed up.
The quantity of demand by all buyers at a given price.
What is demand schedule?
A tabular representation of demand
What is a demand curve?
A graphical representation of demand
The demand schedule and curve both show what.
The relationship between the price of a product and the quantity demanded of the product
Quantity demanded refers to what?
A point in the demand curve at a specific price
What is the law of demand?
It indicates that an inverse or negative relationship exists between the quantity demanded of a good and its price.
Two reasons for the law of demand occurring?
Income effect
Substitution effect
What is income effect?
A lower price means higher purchasing power and more people can buy the product.
Changing the price of a good changes the amount that can be purchased
What is the substitution effect?
A change in the price of one good creates an incentive for a person to buy a substitute for that good.
What is a change in quantity demanded?
It is triggered by a price change of a good and is represented by a movement ALONG the demand curve. The only thing that changes is price.
What is a change in demand?
Caused by a factor that was held constant and is depicted by a shift in the demand curve.
What are the 5 non-price variables that influence the demand curve?
Income
Prices of related goods
Tastes
Population and demographics
Expected future prices
What is supply?
The various quantities of a good or service that forms are willing and able to offer for sale at various prices over a period of time.
What is individual supply?
How much a firm is willing to produce at a given price
What is market supply
The quantity supplied by all sellers over a given time period.
Why is quantity supplied?
A point in the supply curve at a specific price
What do both the supply curve and schedule show?
The relationship between the price of a product and the quantity supplied if the product when all other influences in selling plans are held constant.
What is the law of supply?
Comes from basic economic theory that indicated that a positive or direct relationship exists between the quantity supplied of a good and its price
What does the law of supply state?
When all other factors influencing the decision to sell are held constant, the higher the price of a good, the higher is the quantity supplied and vice versa.
What changes the quantity supplied?
It’s triggered by an initial change in price of the good and moved along the supply curve
What causes a change in supply?
Caused by a change in other factors other than price and is depicted by a shift in the supply curve.
