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Price quantity demanded

Demand is a relationship between _______ and ___________

Quantity demanded

The quantity of a good that people want to buy at a given price during a specific period of time

declines, rises

The law of demand states that a quantity demanded of a good in a market ______ as its price ______

negatively

The demand curve slopes downward from left to right because the quantity demanded is ______ related to price

Right

An increase in demand shifts the demand curve to the _____

Left

A decrease in demand shifts the demand curve to the ____

Consumer preferences, consumer information, consumers incomes, number of consumers in the market, consumers expectations of future prices, prices of closely related goods

What causes shifts in the demand curve?

Increase

If the preference for a product increases, then the demand for that product will ________

Increase

If a sufficient number of demanders expect the price of the good to increase in the future, these people will ______ increase their demand of the product today in order to stock up on the good and avoid the higher price in the future.

Decrease

If a sufficient number of demanders think the price will decline tomorrow, the demand today will ________

increases

As the number of demanders in the market or population increases the demand for the good ______

Normal

If demand increases after an increase in income, the the good is considered a _____ good

Inferior

If demand decreases after an increase in income, the good is considered an _____ good

Decline

If the price of a complement increases, the demand for the product in focus will ______

Decline

If the price of sugar increases, the quantity of coffee demanded at each price will ______

Increase

When the price of a substitute increases, the demand for the good in focus will ______

When the quantity demanded changes as a result of a change in the price of the good

When does movement along the demand curve occur?

change in quantity demanded

Economists refer to a movement along the demand curve as a

price

A shift in the demand curve occurs if there is a change that is due to any source except the ______

price, quantity supplied

Supply is a relationships between _____ and _______

higher, higher

The law of supply says that the _____ the price, the _____ the quantity supplied

positively

The law of supply says that the price and the quantity supplied are ______ related

increase

When the price of a good increases, it leads to an ____ in the quantity supplied

Right

When supply increases, the supply curve shifts to the ____

decreases (shift to the left)

As the prices of factors increase, the costs of production increases, and supply _______

increase (shift to the right)

If factor prices decline, then it is cheaper to produce and supply will _______

decrease

Assume Good A and Good B are substitutes in production. As the price of Good B increases, the supply of Good A will _____ as suppliers shift production into Good B

Technology, prices of related goods, expected future prices number of producers

What effects the supply curve?

increase

As the number of producers increases, the supply of the good will _________

increase

An improvement in technology reduces the amount of factors of production required to produce a given amount of output. Therefore, an improve in technology will reduce the cost of production and lead to an ________ in supply

increase, increase, increase

Assume Good A and Good B are complements in production. If the price of Good B increases, the supply of Good A will _____. When the price of Good B _____, the quantity of Good B supplied also ________

increase, reduce

Taxes _____ firms costs and ______ supply

Left

The supply curve shifts to the _______ when a tax on what firms sell in the market increases

quantity supplied changes as a result of a change in the price of the good

Movement along the supply curve occurs when the

price

A shift in the supply curve occurs if there is a change due to any source except the ___

Rises

When there is a shortage, price _____

Falls

Whenever there is a surplus, price _____

the same

At the market equilibrium, price is _____

supplied

Surplus is a situation in which quantity _______ is greater than quantity demanded

demanded

Shortage is a situation in which quantity ______ is greater than quantity supplied

reduces, increases

When there is a shortage, a higher price ______ the quantity demanded and _____ the quantity supplied to eliminate the shortage

increases, decreases

When there is a surplus, a lower price _______ the quantity demanded and _______ the quantity supplied to eliminate the surplus

increases, increases

An increase in demand _____ the equilibrium price, and ______ equilibrium quantity

reduces, reduces

A decrease in demand ______ the equilibrium price, and ______ equilibrium quantity

reduces, increases

A increase in supply ______ equilibrium price, and _______ equilibrium quantity

increases, reduces

A decrease in supply ______ equilibrium price, and ______ equilibrium quantity

increase, decrease

If both supply and demand increase, then the equilibrium quantity will ________. If supply shifts more than demand, the equilibrium price will _______

increase, increase

If both supply and demand increase, then the equilibrium quantity will ________. If demand shifts more than supply, the equilibrium price will _______

decrease, decrease

If both supply and demand decline simultaneously then equilibrium quantity will ______. If demand decreases more than supply, the equilibrium price will ________

decrease, increase

If both supply and demand decline simultaneously then equilibrium quantity will ______. If supply declines more than demand, the equilibrium price will ________

Decrease. increases

If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is more than the increase in supply, the quantity _______

Decrease. decreases

If supply increases and demand decreases simultaneously, then equilibrium price will ______. If the decrease in demand is less than the increase in supply, the quantity ______

Increase, decrease

If supply decreases while demand increases then price will _____. If the decrease in supply is more than the increase in demand, then equilibrium quantity will ______

increase, increase

If supply decreases while demand increases then price will _____. If the increase in demand is more than the increase in demand, then equilibrium quantity will _______.

price ceiling

A government price control that sets the maximum allowable price for a good

price floor

A government price control that sets the minimum allowable price for a good

to help consumers in situations where the government thinks that the equilibrium price is too high

What's the purpose of a price ceiling?

to help suppliers of good and services in situations where the government feels that the equilibrium price is "too low"

What's the purpose of price floors?

shortages, long lines for goods, black markets, reduction in quality of goods

What are side effects of price ceilings?

more (shortage)

When there are price ceilings, the quantity demanded is more or less than the quantity supplied?

more

When there are price floors, the quantity supplied is more or less than the quantity demanded?

higher

For price floors to effect the market, they have to be _____ than the equilibrium price

lower

For price ceilings to effect the market, they have to be _____ than the equilibrium price

Cause surpluses, productivity problems.

What are the side effects of price floors?

quantity demanded, price of that good

The price elasticity of demand is the percentage change in the ____________ of a good divided by the percentage change in the ______ of that good

quantity demanded, price.

The price elasticity of demand is a measure of the sensitivity of the _________ of a good to the ______ of the good

large

If the price elasticity of demand for contact lenses is high, than the quantity of contact lenses demanded by people changes by a ____ amount when the price changes

small

If the price elasticity of demand for bread is low, than the quantity of bread demanded changes by a _____ amount when the price of bread changes

very

if there's a relatively flat line, this shows that the quantity demanded is ______sensitive to the price

high

If there's a demand curve with a relatively flat curve, then there is a _____ price elasticity of demand

low

If the demand curve is more vertical, then there is a ___ price elasticity of demand

price x quantity

How do you find total revenue?

steeper

The ______ the demand curve, the more inelastic the demand

Elastic

If a product has several substitutes, then an increase in price will lead to a relatively large decrease in quantity demanded as consumers switch to substitutes, implying a relatively _______ demand

Inelastic

If a good does not have many substitutes, a price change does not change quantity demanded very much, implying a relatively ________ demand.

Elastic

The greater the share of your income spent on a good, the more [elastic or inelastic] the demand?

Because a small percentage increase in price can take a big bite out of a household's discretionary income and cause the household to reconsider how they will spend their money

Why would a greater share of income spent on a good mean the demand for that good is elastic?

elastic

The longer a price change is in place the more _____ demand is

As time passes, it is more likely that a substitute can be found for the good.

Why does a longer price change in place make demand more elastic?

decrease

If demand is elastic, a price increase will correlate with a ______ in industry revenue

increase

If demand is inelastic a price increase will correlate with an ________ in industry revenue

fixed resources, fixed technology

What are the assumptions of the PPF?

elasticity equals to zero

Perfect in-elasticity

elasticity between zero and one

Relative inelasticity

elasticity equal to one

unitary elasticity

elasticity greater than one and less than infinity

relative elasticity

elasticity equal to infinity

perfect elasticity

inelastic, increase

If a one percent change in price causes less than a one percent decline in quantity demanded, then demand is relatively ________ and the price change will cause an _______ in the industry's total revenue

elastic, decrease

If a one percent change in price corresponds with a greater than one percent change in quantity demanded, then demand is relatively _______ and the price change will cause a _____ in industry total revenues

decrease

When demand is relatively elastic, price increases lead to a ________ in total revenue

do not cause

When demand is unitary elastic price increases _______ changes in total revenue

normal, inferior

Whether or not the income elasticity of demand is positive or negative depends upon whether the product is ______ or ______

normal

If the income elasticity of demand is positive, the good is _______

inferior

If the income elasticity of demand is negative, the good is inferior

Substitutes

If the cross-price elasticity is positive, the two goods are _______

Complements

If the cross-price elasticity is less than zero then the two goods are ______

positive

The price elasticity of supply is _____ because the law of supply implies a _____ relationship between price and quantity supplied

perfectly inelastic

If the price elasticity of supply is zero, supply is _____

relatively inelastic

If the price elasticity of supply is between zero and one, supply is

unitary elastic

If the elasticity of supply equals one, then supply is

relatively elastic

If the elasticity of supply is greater than one, supply is considered

perfectly elastic

If elasticity of supply is infinite, supply is

technology used to produce the good and length of time during which the price change is in place

Two things affect the price elasticity of supply

some technology is impossible to replicate

Why does technology affect the elasticity of supply?

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