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Definition
| A group of buyers and sellers of a particular product |
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Definition
| The relationship between the price of a product and the quantity consumers are willing and able to buy per period. |
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| What is the Law of Demand? |
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Definition
| When price goes down, the quantity demanded goes up, and when the price goes up the quantity demanded goes down. |
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| What type of relationship do price and quantity have in the law of demand? |
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Definition
| A negative/inverse relationship |
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| What does it mean if the demand curve shifts to the right? |
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Definition
| There is an increase in demand. |
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| What does it mean if he demand curve shifts to the left? |
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Definition
| There is a decrease in demand |
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| Movement along the demand curve = ________ which = _________ |
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Definition
| change in quantity demand, change in price |
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Term
| A shift in the Demand Curve is not due to |
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Definition
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Term
| 5 reasons for change in demand |
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Definition
1)change in income
2)Changes in the price of other goods
3)Changes in Expectations
4)Change in the number of consumers
5)Changes in customers taste |
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Term
| What is the Law of Supply? |
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Definition
| When price goes up quantity supplied goes up, when price goes down quantity supplied goes down. |
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Term
| Movement along supply curve = _______ which = ______ |
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Definition
| change in price, change in quantity supplied |
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Term
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Definition
| there is a decrease in supply |
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Term
| Supply curve shifts right |
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Definition
| there is an increase in supply |
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Term
| 4 Reasons for shifts in supply curve |
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Definition
1) technological change
2)changes in production costs
3) changes in producers expectations
4) changes in number of producers |
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Term
| How do you create a market? |
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Definition
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Term
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Definition
| The market price is above the equilibrium price, Qs>Qd (amount= Qs-Qd) |
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Term
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Definition
| The market price is below the equilibrium price, Qd>Qs (amount= Qd-Qs) |
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Term
| The tendency of a market is always moving towards |
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Definition
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Term
| Increase in demand leads to |
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Definition
| Increase in both price and quantity |
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| Decrease in demand leads to |
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Definition
| Decrease in both price and quantity |
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Term
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Definition
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Term
| Price elasticity of demand (Ed) measures |
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Definition
| consumers responsiveness to changes in price |
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Term
| What is the equation for elasticity of demand (Ed) ? |
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Definition
Ed= Q2-Q1 P2+P1
------ x ------
Q2+Q1 P2-P1 |
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Term
| When do you ignore the negative sign? |
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Definition
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Definition
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Definition
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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
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Definition
| Infinity=Perfectly Elastic |
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Term
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Definition
| Zero = Perfectly Inelastic |
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Term
| What determines price elasticity? |
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Definition
| Availability of substitutes |
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Term
| When is price elasticity higher? |
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Definition
| when close substitutes are available |
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Term
| How do you calculate Total Revenue (TR) |
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Definition
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Term
| If demand is elastic a ____ in price leads to a ______ in Total Revenue |
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Definition
Increase , Decrease
Decrease , Increase |
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Term
| If demand is inelastic a ____ in price leads to a ______ in Total Revenue |
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Definition
Increase, Increase
Decrease, Decrease |
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Term
| What makes demand inelastic? |
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Definition
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Term
| If demand is Unit Elastic |
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Definition
| An increase or decrease in price will not affect the total revenue |
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Term
| What does Income Elasticity of Demand (Ei)measure? |
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Definition
| the responsiveness of demand to a change in consumer income |
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Term
| What is the equation for Elasticity of Demand (Ei)? |
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Definition
Ei= Q2-Q1 I2+I1
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Q2+Q1 I2-I1 |
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Term
| What is an Inferior Good? |
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Definition
Goods where even though the consumer income increases the demand for these goods decrease
(Fast food, Used Furniture, etc) |
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Term
| Normal Goods have a _____ Income Elasticity |
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Definition
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Term
| Inferior Goods have a _____ Income Elasticity |
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Definition
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Term
| What does Price Elasticity of Supply (Es) measure? |
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Definition
| Producers responsiveness to a change in price |
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Term
| What is the equation for Price Elasticity of Supply (Es)? |
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Definition
Es= Q2-Q1 S2+S1
------ x ------
Q2+Q1 S2-S1 |
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