# Shared Flashcard Set

## Details

econ 101
chapter 4
45
Economics
12/10/2009

Term
 demand
Definition
 a relationship between price and quantity demanded of a certain good or service
Term
 quantity demanded
Definition
 the total number of units of a good or service puchased at a certain price
Term
 law of demand
Definition
 the common relationship that a higher price leads to a low quantity demanded of a good or service
Term
 demand schedule
Definition
 a table that shows a range of prices for a certain good or service and the quantity demanded at each price
Term
 demand curve
Definition
 a line that shows the relationship between price an quantity demanded of a certain good or service on the horizontal axis and the price on the vertical axis
Term
 supply
Definition
 a relationship etween price and the quantity supplied of a certain good or service
Term
 quantity supplied
Definition
 the total number of units of a good or service sold at a certain price
Term
 law of supply
Definition
 the common relationship that a higher price is associated with a greater quantity supplied
Term
 supply schedule
Definition
 a table that shows a range of prices for a good or service and the quantity supplied at each price
Term
 supply curve
Definition
 a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis
Term
 equilibrium price
Definition
 the price where quantity demanded is equal to the quantity supplied
Term
 equilibrium quantity
Definition
 the quantity at which quantity demanded and quanitity supplied are equal at a certain price
Term
 equilibrium
Definition
 the comination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to shift
Term
 excess supply
Definition
 when at the existing price, quantity supplied exceeds the quantity demanded;also called a "surplus"
Term
 surplus
Definition
 when at the existing price, quantity supplied exceeds the quantity demanded; also called "excess supply"
Term
 excess demand
Definition
 at the existing price, the quantity demanded exeeds the quantity supplied, also called "shortage"
Term
 shortage
Definition
 at the existing price, the quantity demanded exceeds the quantity demanded exceeds the quantity supplied also called "excess demand"
Term
 ceteris paribus
Definition
 other things being equal
Term
 shift in demand
Definition
 when a change in some economic factor related to demand causes a different quantity to be demanded at every price
Term
 reasons for a shift in demand
Definition
 1)change in taste2)population3)change of income4)price of substitutes and compliments5)future expectations
Term
 normal goods
Definition
 where the quantity demanded rises as income rises
Term
 inferior goods
Definition
 good where the quantity demanded alls as income rises.
Term
 substitutes
Definition
 goods that can replace each other to some extent, so that greater consumption of one good can mean less of the other
Term
 complements
Definition
 goods that are often used together, o that consumption of oe good tends to increas consumption of the ther
Term
 shift in supply
Definition
 when a change in some economic factor related to supply causes a quantity to be supplied at every price
Term
 reasons for shift in supply curve
Definition
 1)natual conditions2)input prices3)chnges in technology4)government taxes5)regulations6)subsidies
Term
 price controls
Definition
 government laws to regulate prices
Term
 price ceiling
Definition
 a law that prevents a price from rising above a certain level
Term
 price floor
Definition
 a law tht prevents a price from falling below a certain level
Term
 consumer surplus
Definition
 the venefit consumers receive from buying a good or service, measure by what the individuals would have been willing to pay minus the amount that they actually paid
Term
 producer surplus
Definition
 the benefit producers reveive from selling a good or service, measure by the price producer actually received minus the price the producer would have been willing to accept
Term
 social surplus
Definition
 the sum of consumer and producer surplus
Term
Definition
 the loss in social surplus that occurs when a market produces an inefficient quantity
Term
 an increase in demand leads what kind of movement?
Definition
 movement along supply curve to a higher equilibrium price and a higher equilibrium quantity
Term
 a decrease in supply leads to what kind of movement
Definition
 movement along demand curve to a high equilibrium price and lower equilibrium quantity
Term
 demand goes down and supply goes down; what happens to equilibrium price and quantity?
Definition
 equilibrium quantity falls and price is ?
Term
 supply goes up and demand goes down; what happens to equilibrium price and quantity
Definition
 price falls and Q is ?
Term
 reasons why the government would impose price ceiling:
Definition
 government worries that producers are makin "excess" profit and government worries necessities are unaffordable
Term
 what happens when a price ceiling is set below equilibrium?
Definition
 quantity demanded will exceed quantity supplied and there will be a shortage
Term
 consequences of price ceilings
Definition
 1)inefficient allocations to consumers2)wasted resources3)low quality4)black market
Term
 reasons for a price floor
Definition
 1)influencial groups of sellers (farmers)2)POLICY-MAKERS DISLIKE MARKET OUTCOMES (LOW-SKILLED people get paid to little)
Term
 what happens when price floors is set above equilibrium?
Definition
 quantity supplied will exceed quantity demanded and there will be a surplus
Term
 consequences of pric floors
Definition
 1)inefficiency (greater unemployement)2)wasted resources3)illegal activity (black market)4)inefficiently high "quality"
Term
 incidence
Definition
 who bears the tax. it si not recessarily the person who writes the check!
Term
 tax revenue
Definition
 the average tax rate times the quantity that is consumed at the new equilibrium
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