# Shared Flashcard Set

## Details

Unit 2 ID's
n/a
8
Economics
09/19/2013

Term
 Law of Demand        [image]
Definition
 The quantity of a good demanded per period relates inversely to its price, oher things constant.  When the price goes up, the quantity demanded goes down. When the price goes down, the quantity demanded goes up. [image]
Term
 Law of Supply [image]
Definition
 The quantity of a good supplied during a given time period is usually directly related to its price, other things constant. Supply is a relation showing the quantities of a good producers are willing and able to sell at various prices during a given period, other things constant. The supply curve is a curve or line that shows the quanitities of a particular good supplied at various prices during a given time period, other things constant. [image]
Term
 Determinents of Demand [image]
Definition
 A demand curve isolates the realtionship between price and quantity demanded when other factors that could affect demand as assumed constant. They include: consumer income, prices of related goods, number and composition of consumers, consumer expectations, and consumer tastes. Normal vs. inferior good and substitutes vs. complements can also change demand.   If consumer income increases, they are more will to buy normal goods and less inferior.
Term
 Determinants of Supply [image]
Definition
 Anything that affects production costs and profit opportunities helps shape the supply curve. They include: cost of resources used to make the good, price of other goods these resources could make, technology, producer expectation, number of sellers. Taxes and subsidies also effect the suppky curve.  If there is a technological breakthrough that may cause production to increase, the supply will increase.
Term
 Law of Diminishing Marginal Utility [image]
Definition
 Marginal utility is the change in total utility resulting from a one-unit change in consumption of a good. The law of diminishing marginal utility states that the more of a good an individual consumes per period, other things constant, the small the marginal utility of each additional unit consumed. It is a feature of all consumption.
Term
 Income Effect [image]
Definition
 It is the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service. The relationship between income and the quantity demanded is a positive one, as income increases, so does the quantity of goods and services demanded. When a person's income increses, other products do not increase. This will increase their consumption.
Term
 Substitution Effect  [image]
Definition
 The idea that as prices rise or income decreases consumers will replace more expensive items with less costly alternatives. Although beneficial to some, in general, it is very negative in nature, as it limits choice. It is true not only for products, but services as well.  Winter holiday sales.
Term
 Change in Quantity Demanded [image]
Definition
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