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Microeconomics
supply and demand chapter 3 paul krugman, robin wells book
26
Economics
Undergraduate 2
02/20/2010

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Term
competetive market
Definition
is a market in which there are many buyers and sellers of the smae good or service, none of whom can influence the price at which the good or service is sold.
Term
supply and demand model
Definition
is a market model of how a competetive market works.
Term
demand schedule
Definition
shows how much of a good or service consumers will want to buy at different prices.
Term

quantity demanded

 

Definition
is the actual amount of a good or service consumers are willing to buy at some specific price.
Term
demand curve
Definition
is a graphical representation of the demand schedule. It shows the relationship bwtween quantity demanded and the price.
Term
Law of demand
Definition
says that a hight price for a good or service, other things equal, leads people to demand a smaller quantity of the good or service.
Term
A shift of the demand curve
Definition
is a change in the quantity demanded at any given price, represented by the change of the original demand curve to a new position, denoted by a new demand curve.
Term
movments along the demand curve
Definition
is a change in the quantity demeanded of a good that is the result of a change in that good's price.
Term
Substitutes
Definition
Two goods are substitutes if a rise in the price of one of teh goods leads to an increase in the demand for the other good.
Term
compliments
Definition
Two goods are compliments if a rise in the price of one good leads to a decrease in the demand for the other good.
Term
5 things that will shift the demand curve
Definition

1) changes in the price of related goods and services

2) changes in Income

3) changes in taste

4) changes in expectations

5) Changes in number of consumers

Term
Normal good
Definition
when a rise in income increases the demand for a good-the normal case- it is a normal good.
Term
inferior good
Definition
When a rise in income decreasese the demand for a good, it it an inferior good.
Term
individual demand curve.
Definition
illustrates the relationship between quantity demanded and the price for an individual consumer.
Term
quantity supplied
Definition
is the actual amount of a good or service producers are willing to sell at some specific price.
Term
supply schedule
Definition
shows how much of a good or service producers wil supply at different prices
Term
supply curve
Definition
shows the relationship between quantitiy supplied and price.
Term
shift of the supply curve
Definition
is a change in the quantity supplied of a good or service at any given price. It is represented by the change of the original supply curve to a new position denoted by a new supply curve.
Term
Movements along the supply curve
Definition
A movment along the supply curve is a change in the quantity supplied of a good that is the result of a change in that good's price.
Term
input
Definition
is a good or service that is used to priduce another good or service.
Term
individual supply curve
Definition
illustatres the relationship between quantity supplied and price for an individual producer.
Term
equilibrium Price
Definition
A competetive market is in the equilibrium when price has moved to a level at which the quantity of a good or service demanded equals the quantity of that good or service supplied. The price at which this takes place is the equilibrium price, also resferred to as the market-clearing price.
Term
Equilibrium quantity
Definition
THE quantity of the good or service is the equilibrium quantity.
Term
surplus
Definition
There is a surplus of a good or service when the quantity supplied exceeds the quantity demanded. Surpluses accur when the price is above its equilibrium level.
Term
shortage
Definition
THere is a shortage of a good or service when the quantity demanded exceeds the quantity supplied. Shortages occur when the price is below its equilibrium level.
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