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35 Cards in this Set
- Front
- Back
there will always an indirect or negative relationship between the price and quantity demanded |
Law of Demand |
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reflects a movement along the demand curve as the price changes |
Quantity Demanded |
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a movement of the entire demand curve; there is no price associated |
Change or Shift in Demand |
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rightward shift in demand |
Increase in Demand |
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leftward shift in demand |
Decrease in Demand |
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these determinants show us that when you make choices about what to buy, you consider other factors in addition to the price |
Non-Price Determinants |
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1. Consumers Tastes and Preferences 2. Income 3. Price of Related Goods 4. Number of Buyers in the Market 5. Expectations |
Non-Price Determinants of Demand |
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If your income goes up, you will by more superior goods, and less inferior goods If your income goes down, you will buy more inferior goods, and less superior goods |
Income |
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Contains both a complementary good and substitute good |
Price of Related Goods |
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If the price for one good go up, the demand for the other good decreases and vice versa |
Complementary Good |
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The price of one good goes up, the demand for the other good increases and vice versa |
Substitute Good |
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There will always be a direct or positive relationship between price and quantity supplied |
Law of Supply |
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reflects a movement along the supply curve as the price changes |
Quantity Supplied |
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a movement of the entire supply curve |
Change or Shift in Supply |
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rightward shift in supply |
Increase in Supply |
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leftward shift in supply |
Decrease in Supply |
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1. Cost of Inputs 2. Technology 3. Number of producers in the market 4. Price of related goods 5. Gov't policies 6. Expectations |
Non-Price Determinants of Supply |
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Cost of inputs goes up, there is a decrease in supply Cost of inputs goes down, there is an increase in supply |
Cost of Inputs |
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this will always increase supply-ceteris paribus |
Technology |
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fewer producers-supply decrease more producers-supply increases |
Number of Producers in the Market |
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Taxes and Subsides |
Gov't Policies |
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price where quantity supplied equals quantity demanded |
Market Equilibrium |
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occurs when price is above equilibrium; QS exceeds QD |
Surplus |
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occurs when price is below equilibrium; QD exceeds QS |
Shortage |
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Increase in Demand Decrease in Demand Increase in Supply Decrease in Supply |
Four possible shifts that will disrupt equilibrium |
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when the price goes up |
Either an increase in demand or a decrease in supply |
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when the price goes down |
Either a decrease in demand or an increase in supply |
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a legal price set below equilibrium |
Price Ceiling |
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a legal price set above equilibrium |
Price Support |
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a plan for expenditures (outlays) and tax collections (tax revenues and receipts) |
Budget |
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Gov. Expenditures=Tax Revenues |
Balanced Budget |
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Tax Revenues exceeds Gov. Expenditures |
Budget Surplus |
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Gov. Expenditures exceeds Tax Revenues |
Budget Deficit |
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Sum of all past budget deficits |
National Debt |
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This is calculated yearly |
Budget Deficit |