Term
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Definition
| money given by the government |
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Term
| what are the reasons for supply? |
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Definition
| cost of inputs, productivity, tech., number of sellars, taxes, expectations, gov.reg. |
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Term
| what are the reasons for demand? |
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Definition
| taste, consumer income, subsitute, complement |
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Term
| What does income and substitution effect both cause? |
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Definition
| they cause a change in quantity demanded |
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Term
| when graphing a change in supply/demand where does it shift on the graph when it is increasing? |
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Definition
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Term
| where does it shift on a graph in when change in supply and demand is decreasing |
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Definition
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Term
| a change in demand is never in response to a change in price of that product. T OR F? |
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Definition
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Term
| Why does a change in quantity demanded happen? |
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Definition
| because of a price change which is changed because of supply |
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Term
| what happens on a change in QUANTITY (supplied or demanded) qraph? |
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Definition
| There is NOT a new line but a new point on the existing line. |
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Term
| what is the defference between substitution effect and income effect? |
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Definition
| S.E. means that the price of YOUR good is changing and I.E. means that the price of the product is changing |
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Term
| what happens in just a change in demand or supply graph? |
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Definition
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Term
| do the numbers on a demand schedule increase or decrease (going from to to bottom) |
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Definition
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Term
| do the numbers on a supply schedule increase or decrease (going from top to bottom) |
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Definition
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Term
| does price increase or decrease on a supply and demand schedule? |
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Definition
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Term
| When looking at prices when does surplus or shortage begin to occur? |
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Definition
| .01 above or below the original price |
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Term
| what is the definition of demand? |
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Definition
| the desire, ability, and willingness to but a product |
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Term
| what are the three componets of demand? |
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Definition
| Desire, ability to pay, and willingness |
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Term
| in what direction does a demand curve slope? |
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Definition
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Term
| in what direction does a supply curve go? |
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Definition
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Term
| what is the law of demand? |
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Definition
| the quantity demanded for an economic product varies with price |
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Term
| what is marginal utility? |
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Definition
| the extra usefulness derived from aquiring one or more units of a product |
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Term
| what is diminishing marginal utility? |
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Definition
| with each continous product, the utility becomes less |
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Term
| when does a change in demand or supply take place? |
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Definition
| when a new quantity is demanded or supplied at every price |
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Term
| On a graph: when does the change in supply and/ or demand increase? decrease? |
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Definition
increase= shift to the right
decrease= shift to the left |
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Term
| what reasons change a quantity demanded? |
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Definition
| income effect and substitution effect |
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Term
| how does a change in quantity look on a graph? |
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Definition
| a new point is created on the existing line of supply or demand |
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Term
| what are the 3 determanants of elaticity of demand? |
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Definition
can purchase be delayed?
are there adequate substitutes?
does the purchase require a large portion of income? |
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Term
| what is the equation for demand elasticity? |
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Definition
| P*Q of the higher number THEN P*Q of the lower number. if the 1st answer increases when compared to the 2nd answer it is elastic, if it decreases it is inelastic |
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Term
| what is the definition of supply? |
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Definition
| the offering of economic products for sale |
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Term
| what is the law of supply? |
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Definition
| the quantity supplied for an economic product varies directly with its price |
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Term
| what is the definiton of elasticity of supply? |
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Definition
| how responsive supply is to a price change |
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Term
| what is the equation for elasticity of supply? |
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Definition
| high quantity/low quantity AND high price/low price. if quantity is bigger=elastic if quantity is less=inelastic |
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Term
| Price floors result in what? |
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Definition
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Term
| price celings result in what? |
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Definition
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Term
| in order for price celings or floors to be effective the must be ____________. |
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Definition
| above or below equillibrium |
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Term
| in order for price floor to be effective where does it have to be? |
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Definition
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Term
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Definition
| quantity demanded or supplied is responsive to price change |
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Term
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Definition
| not very responsive to price change |
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Term
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Definition
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Term
| general markets are elastic or inelastic? |
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Definition
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Term
| specific markets are inelastic or elastic? |
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Definition
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Term
| what does unit elastic mean |
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Definition
| when quantity doesn't change when price changes |
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Term
| what must be done to fix a surplus? |
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Definition
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Term
| when does a surplus occur? |
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Definition
| when the price is too high |
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Term
| what must be done to fix a shortage |
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Definition
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Term
| price floors result in what? |
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Definition
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Term
| what reasons change a quantity demanded |
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Definition
| income and substitution effect |
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Term
| where is a price floor located |
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Definition
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Term
| what causes a change in quantity |
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Definition
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Term
| what changes in an income effect? |
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Definition
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Term
| what does inelastic mean? |
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Definition
| a change in price but the product is still needed |
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Term
| what is the difference between consumer income and income effect |
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Definition
CONSUMER INCOME: a change in demand and the income level is changing
INCOME EFFECT: it is a change in quantity demanded and the price of the product is changing |
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