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Terms in this set (34)
What is demand?
desire, ability, and willingness to by a product
what is an individual demand curve?
illustrates how the quantity that a person will demand varies depending on a price of a good or service
what is a demand schedule?
list of prices and the quantities that will be bought at each set price
why is the demand curve downward sloping?
there is an inverse relationship. Prices go up quantity demanded goes down and vise versa.
describe the relationship between the demand schedule and the demand curve.
what does the law of demand state? and what happens when prices go up and down?
Rule stating that more will be demanded at lower prices.
up-quantity goes down
down- quantity goes up
what is a maker demand curve?
illustrates how the quantity that all persons interested will demand varies depending on the price of the good or service.
what is marginal utility?
satisfaction or usefulness obtained from acquiring one more unit of a product
what is the principle of diminishing marginal utility?
states that the satisfaction we gain from buying a product lessens as we buy more of the same product.
which is why the demand curve is decreasing.
describe how the slope of the demand curve can be explained by diminishing marginal utility.
as you continue to use a product the less satisfaction you get from it and the marginal utility decreases.
in an economic sense, when do you stop buying a good?
when the price is to high and there is no more satisfaction (marginal utility)
what is a change in quantity demanded?
shows a change in the amount of a product purchased and there is a change in price
what is the "income effect"? how does this explain the change in quantity demanded when price goes down?
as prices drop consumers are left with extra real income
what is the "substitution effect"?
price can cause consumers to substitute on product with another similar but less expensive product.
what is a change in demand?
when people buy different amounts of a product at the same price.
what are the six thing that cause a change in demand?
income, changes of taste/preference, change in price in a substitute product or good, change in price for a complementary good, change in consumer expectations, and change in number of buyers/population.
look at example on notes
changes of taste/ preference?
if popularity goes down then so does the price
if popularity goes up then so do the price
change in price in a substitute product or good?
if the price goes up for "pepsi" then the demand for "coke" goes up and coke will be substituted for pepsi.
if a price goes up for something yo will substitute it with something else.
change in price for a complementary good?
if peanut butter goes out of business then nobody will buy jelly
change in consumer expectation?
when peoples expectation of price raise in future, they will buy a lot now which will raise the demand of the product now
change in number of buyers/population?
when population rises, the demand of things will all rise.
What is supply?
Amount of a product that would be offered for sale at all possible prices that could retail in the moment
what does the law of supply state?
the principle that suppliers will normally offer more for sale at high prices and less at lower prices
what is the difference between and individual supply curve and a market supply curve?
Individual: illustrates how a quantity that a producer makes varies depending on price of market.
Market: illustrate how a quantity that all producers offer in the market.
how do economists analyze supply?
analyze supply by listing sloping schedule
what type of slope does the supply curve have?
supply curve goes up.
as price goes up, companies quantities provide goes up
what is a change in quantity supply?
change in amount offered for sale in response to a change in price.`
what do producers have the freedom to do if prices fall too low?
Slow down production until it stops production
what do producers have the freedom to do if the prices rise?
what is a change in supply?
when suppliers offer different amounts for supply at all possible prices
what factors cause a change in supply?
cost of inputs, productivity, technology, taxes, and government regulations.
what is movement?
always change in quantity due to price.
What is shift?
change in quantity that was due to something other than price.
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