Chapter 4 Econ
Terms in this set (35)
a groups of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product.
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price
perfectly competitive market
Must have two characteristics:
1) the goods offered for sale are all exactly the same
2) the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price.
Ex) Grain market
buyers and sellers who in perfectly competitive markets accept the price the market determines.
What a seller is called when they are the only seller in the market and so they set the price.
Ex) Local TV company
The amount of a good that buyers are willing and able to purchase
law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises.
A table that shows the relationship between the price of a good and the quantity demanded, holding constant everything else that influences how much consumers of the good want to buy. Shows the quantity demanded at each price.
a graph of the relationship between the price of a good and the quantity demanded. Downward-sloping line relating price and quantity demanded. Graphs the demand schedule, illustrates how the quantity demanded of the good changes as its price varies.
the sum of all the individual demands for a particular good or service. Add the demand schedules of each individual for a certain good to get this. Finds the total quantity demanded at any price by adding the individual quantities. Shows how the quantity demanded of a good varies as the price of the good varies, while all other factors that affect how much consumers want to buy are held constant.
increase in demand
any change that increases the quantity demanded at every price shifts the demand curve TO THE RIGHT
decrease in demand
any change that reduces the quantity demanded at every price shifts the demand curve TO THE LEFT
income, price of related goods, tastes, expectations, number of buyers
most important variables that can shift the demand curve.
price of the good itself
represents a movement along the demand curve and supply curve.
what a good is called when the demand for it FALLS when income FALLS. A good for which, other things equal, an increase in income leads to an increase in demand.
what a good is called when the demand for a good RISES when income FALLS. A good for which, other things equal, an increase in income leads to a decrease in demand.
Ex) Buses. When your income falls, you are more likely to take the bus over getting a car or taking a cab.
Two goods for which an increase in the price of one leads to an increase in the demand for the other.
Ex) If ice cream price rises, you're more likely to buy the cheaper and similar alternative, frozen yogurt.
Ex) Hotdogs & Hamburgers, sweaters & sweatshirts, movie tickets & video rentals
Two goods for which an increase in the price of one leads to a decrease in the demand for the other,
Ex) If the price of hot fudge falls, you will buy more hot fudge as well as probably ice cream because they are often used together.
Ex) gasoline & automobiles, computers & software, PB & J
tobacco and marijuana
an example that appears to be complements rather than substitutes
The amount of a good that sellers are willing and able to sell. Price plays an important role in this decision.
law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises.
A table that shows the relationship between the price of a good and the quantity supplied, holding constant everything else that influences the quantity sold. Shows the quantity supplied at each price.
A graph of the relationship between the price of a good and the quantity supplied. The curve relating price and quantity supplied. Curves upward because a higher price means a greater quantity supplied. Graphs the supply schedule, illustrates how the quantity supplied of a good changes as its price varies.
the sum of the two individual supplies. The quantity supplied in a market is the sum of the quantities supplied by all the sellers at each price.
increase in supply
any change that raises the quantity supplied at every price shifts the supply curve TO THE RIGHT
decrease in supply
any change that reduces the quantity supplied at ever price shifts the supply curve TO THE LEFT
input prices, technology, expectations, number of sellers
important variables that can shift the supply curve.
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded. The point where supply and demand curves intersect.
the price that balances quantity supplied and quantity demanded. And the price at the point of intersection of a supply and demand curve. Sometimes called the market-clearing price because at this price everyone in the market has been satisfied.
the quantity supplied and the quantity demanded at equilibrium price. The quantity at the intersection of a supply and demand curve.
a situation in which quantity supplied is greater than quantity demanded. Sometimes called a situation of excess supply.
a situation in which quantity demanded is greater than quantity supplied. Sometimes called a situation of excess demand.
law of supply and demand
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.
Global shortage addressed by physicist Gianfranco Vidali.
Author of article: Ana Campoy
SAVE LIVES GUYS. This article was written by John Stossel.
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