Microeconomics - Chapter 3 Supply and Demand

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The Microeconomy Today 11th edition

market activity

The basic goals of utility maximization, profit maximization, and welfare maximization explain most _____________.

Inable

We are absolutely ________________ to produce all the things we need or desire.

Time, energy, resources

The limited amount of _____________, _______________, _____________ we have for producing those things we could make for ourselves.

Circular flow chart

summarizes the kinds of interactions that occur among market participants.

factor market

any place where factors of production are bought and sold

product market

any place where finished goods and services are bought and sold

opportunity cost

the most desired goods or services that are forgone in order to obtain something else

the consumer

the final recipient of all goods and services produced

exchange

a market exists wherever and whenever an ________________ takes place.

dollars, resources

Every market transaction involves an exchange of ___________ for goods (in product markets) or _____________ (in factor markets).

supply

the ability and willingness to see (produce) specific quantities of a good at alternative prices in a given time period.

demand

the ability and willingness to buy specific quantities of a good at alternative prices in a given time period.

demand schedule

a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period

demand curve

a curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period; it shows us how changes in market prices alter consumer behavior

price

the amount we buy of a good depends on its...

price falls

As a good's ______________, people purchase more of it.

law of demand

the quantity of a good demanded in a given time period increases as its price falls

Determinants of market demand

Tastes, income, other goods, expectations, number of buyers

substitute goods

goods that substitute for each other; when the price of good x rises, the demand for good y increases

complementary goods

goods frequently consumed in combination; when the price of good x rises, the demand for good y falls

Rightward shift in demand curve

occurs when income increases and an increase in taste (desire)

movements along the demand curve

a response to prices changes for that good

shifts in the demand curve

occur when the determinants of demand change

changes in quantity demanded

movements along a demand curve are caused by

changes in demand

shifts in a demand curve are caused by

market demand

the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands

the number of potential buyers and their respective tastes, incomes, other goods, and expectations

the market demand is determined by

determinants of market supply

technology, factor costs, other goods, taxes and subsidies, expectations, number of sellers

market supply

the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period

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