Shared Flashcard Set

Details

Supply and Demand
For the CLEP Microeconomics exam 15-20%
14
Economics
Undergraduate 1
01/05/2011

Additional Economics Flashcards

 


 

Cards

Term
What are the determinants of demand?
Definition
  • Income-  can shift depending on if it is a normal good or inferior good
  • Preferences
  • Price of Related Goods- consider substitutes and complements
  • Number of Buyers
  • Expectations of Future Price
Term

What is the

difference between change in demand and change in quantity demanded?

Definition
  • Change in demand-curve shifts
  • change in quantity demanded- movement in one point to another on the same curve
Term
Determinants of Supply
Definition
  • Price in Relevant Resources
  • Technology
  • Number of sellers
  • expectation of future price
  • taxes and subsidies
  • government restrictions
Term
Difference between change in supply and change in quantity supplied
Definition
  • Change in supply- curve shifts
  • Change in quantity supplied- point on curve shifts
Term
What is a price ceiling and what are its effects?
Definition
  1. A price ceiling is a government mandated maximum price
  2. Its effects can be shortages, fewer exchanges, nonprice rationing, buying/selling at prohibited prices, and tie-in sales

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Term
What is a price floor and its effects?
Definition
  1.  A price floor is a government mandated minimum price
  2. Its effects can be surpluses and/or fewer exchanges 
  3. [image]
Term
What is the price elasticity of demand?
Definition

It is a measurement of how much quantity demanded depends on price

 

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Term

What do these mean:

  1. Ed>1
  2. Ed<1
  3. Ed=1
  4. Ed=∞
  5. Ed=0
Definition

The item is:

  1. elastic
  2. inelastic
  3. unit elastic
  4. perfectly elastic
  5. perfectly inelastic
Term

Determinants of Elasticity of Demand

 

Definition
  • Number of Substitutes
  • Percentage of consumer's budget spent on good
  • time
Term
What is the income elasticity of demand?
Definition

It is the change in quantity demanded based on change of income.

 

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Term

What does this mean for an item?

  1.  Ey>0
  2. Ey<0
Definition
  1. The item is is a normal good (demand increases as income inreases)
  2. The item is an inferior good(demand decreases as income increases)
Term
What is the price elasticity of  supply?
Definition

Its the change in quantity supplied due to change in price.

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Same rules as for demand except for supply

Term
What is the cross elasticity of demand?
Definition

Change in quantity demanded of one good in response to change in price of another good

 

 

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Term

What does it mean if

  1. EA/B>0
  2. EA/B<0
Definition

1. The goods are substitutes

2. The goods are complements

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