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microeconomics

Terms in this set (16)

understand how a change in quantity demanded is depicted graphically
(movement); the specific amount consumers are willing to purchase at a specific price; Qd shows up graphically as one particular point on the demand curve
understand how a change in demand is depicted graphically
(shift); represents the choice making behavior of the buyer; it's represented graphically as a downward sloping curve
understand how a change in quantity supplied is depicted graphically
(movement); the specific amount sellers are willing to sell at a specific price; Qs shows up graphically as one particular point on the supply curve
understand how a change in the supply curve is depicted graphically
(shift); represents the choice making behavior of sellers; graphically depicted by an upward sloping curve
understand the law of demand
states that an inverse relationship exists between the price of a good and the quantity demanded; downward slope
Understand shortage situation graphically and facts regarding.
the condition present whenever price falls below the equilibrium price; Qs<Qd
Understand surplus situation graphically and facts regarding.
the condition present whenever price rises above the equilibrium price; Qs>Qd
Understand the law of supply.
states that a direct relationship exists between the price of a good and the quantity supplied; upward slope
normal good
any good for which there is a direct relationship between income and the demand for the good
inferior good
any good for which there is an inverse relationship between income and the demand for the good
quantity demanded
the specific amount consumers are willing to purchase at a specific price
quantity supplied
the specific amount sellers are willing to sell at a specific price
define/ determine: complements
(inverse relationship); goods that are consumed together
ex: Cd's and Cd players
define/ determine: substitutes
(direct relationship) goods that compete for consumers purchases
understand price ceilings
prohibits price from rising above a specific value

Pceiling above PEQ = NO EFFECT
Pceiling below PEQ = SHORTAGE
understand price floors
prohibits price from falling below a specific value

Pfloor above PEQ = SURPLUS
Pfloor below PEQ = NO EFFECT
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