Term
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Definition
| amount of a good that buyers are willing and able to purchase |
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Term
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Definition
| as price rises, quantity demanded falls |
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Term
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Definition
| a graph of the relationship between the price of a good and the quantity demanded |
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Term
| Reasons demand curve shifts |
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Definition
| Income, Prices of related goods, consumer tastes, expectations, number of buyers |
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Term
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Definition
| amount of a good that sellers are wiling and able to sell |
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Term
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Definition
| the quantity supplied of a good rises when price rises |
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Term
| Reasons supply curve shifts |
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Definition
| Input prices, technology, expectations, number of sellers in market |
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Term
| Supply and Demand equilibrium |
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Definition
| market price has reached a level where quantity supplied equals quantity demanded |
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Term
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Definition
| situation in which quantity supplied is greater than quantity demanded |
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Term
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Definition
| situation where quantity demanded is greater than quantity supplied |
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Term
| Three Steps to Analyzing Equilibrium Changes |
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Definition
1. Decide whether event shifts supply, demand or both
2. Decide which direction the curve shifts
3. Compare the changes |
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Term
| Price Elasticity of Demand |
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Definition
| measure of how much a quantity demanded responds to a change in price |
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Term
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Definition
| %change in demand / %change in price |
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Term
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Definition
| availability of close substitutes, neccessities vs. luxeries, definition of the market, time horizon |
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Term
| PE of D formula (Midpoint Method) |
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Definition
| {[(Q2-Q1)/((Q2-Q1)/2))]/[(P2-P1)/((P2-P1)/2))]} |
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Term
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Definition
| Elasticity equals infinity (flat line) |
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Term
| Perfectly inelastic market |
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Definition
| Elasticity equals 0 (verticle line) |
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Term
| Elastic demand and total revenue |
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Definition
| price and total revenue are indirectly proportional (Inelastic or Elastic) |
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Term
| Inelastic demand and total revenue |
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Definition
| price and total revenue are directly proportional (Inelastic or Elastic) |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| what one must give up to get something |
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Term
| Value of marginal product |
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Definition
| Profit x marginal product of workers |
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Term
| compensating differentials |
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Definition
| certain jobs earn more money because of these reasons... |
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Term
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Definition
| demand for workers is derived from the products they produce |
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Term
| profit-maximizing hiring rule |
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Definition
| hire workers until the VMP = wage |
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