50 terms

Chapter 3

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Terms in this set (...)

The number of sellers or competitors in a market is a determinant or shifter of the _curve
supply
What types of goods affect the demand for a product due to a change in their price
complementary and substitute goods
price ceiling
a price at or below is legal, but not above
Gov may place legal limits on prices when it is determined that prices are unfairly _for buyers or unfairly _for sellers
high low
Determinants of supply
*resource prices
*technology
*taxes and subsidies
*producer expectations
*number of sellers in market
what consists of a large number of independently acting buyers and sellers
competitive market
Market
*virtual and or physical space
*pursuit of buyers and sellers in making themselves better off
*buyers and sellers interact in their desire to buy and sell a good/service
Interaction of buyers and sellers determines equilibrium price and equilibrium _
quantity
Law of supply
as price_, the quantity supplied rises; as price_the quantity supplied falls
increase in _ while holding _constant results in a decrease in equilibrium price, but an increase in equilibrium quantity
supply
demand
Buyer's intentions or plans in regard to the purchase of a product is known as a
demand
_in supply while holding demand constant results in an increase in equilibrium price, but a decrease in equilibrium quantity
decrease or shift leftward
A shortage results from an excess of quantity _
demanded
A decrease in demand while holding supply constant will result in...
decrease in both equilibrium price and quantity
Market _ is a schedule or curve showing various amounts of a product that producers are willing and able to make available for sale at each possible price during a specific period
supply
Productive Efficiency
production of any particular good in the least costly way
an increase in _while holding supply constant results in an increase in both equilibrium price and quantity
demand
Law of Demand
inverse relationship between price and quantity demanded
On a supply curve, _is labeled on the vertical axis
price
horizontal=quantity supplied
A price _is a legally mandated price imposed above equilibrium price or the price that a free market would establish
floor
complementary goods
is one that is used together with another good
independent goods
vast majority of goods that are not related to one another
substitute goods
is one that can be used in place of another good
producer expectations of future prices are a determinant of _
supply
Determinants of demand
*prices of related goods
*consumer tastes
*consumer expectations
*changes in income
*number of buyers
The income effect is best described as _increasing the purchasing power of income, enabling consumers to purchase _of a product and vice versa
lower prices; more
If costs of production rise, the producer has an incentive to produce _output
less
Allocative efficiency
particular apportionment or mix of goods and services most highly valued by society
price and quantity supplied have a _relationship
direct
products whose demand varies directly with changes in money or income are called normal or _goods
superior
opposite=inferior
Subsidy
government financial assistance for the production of a good which lowers producers' costs and increases supply
substitution in production is a determinant of _
supply
when the price of a product increases, its complement's demand _
decreases
Demand
buyer side of any market
Demand curve
inverse relationship between price and quantity demanded for any product
Diminishing marginal utility
in any specific time period, buyers will derive less satisfaction from each additional unit of product consumed
An increase or decrease in wage rate would lead to a change in_
supply
Gov-set prices cause (5)
*shortages
*distortions in resource allocation
*surpluses
*negative side effects
*may cause environmental damage
factor other than price affects consumption of a good or service, the demand curve can shift _ or _
left/right
surplus
excess supply
_resource prices raise production costs and, assuming a fixed product price, _profits
higher; reduce
Amount of a product that will be purchase at various possible prices is shown by...
demand
Reasons for decrease in demand
*an unfavorable change in consumer tastes
*falling incomes and the product is a normal good
*decrease in the price of a substitute good
Increase in tax will _production consts and _supply
increase
decrease
Reasons for inverse relationship between price and quantity demanded
*ppl ordinarily buy more of a product at a low price than at a high price
*consumption is subject to diminishing marginal utility
*higher price makes it more likely the consumer will substitute another good
*lower price increases the purchasing power of a buyer's income, enabling a buyer to purchase more of a product
equilibrium output
quantity demanded and quantity supplied are equal in a competitive market
If the government subsidizes the production of a good..._producers' costs and _supply
lowers and increases
demand schedule
organizes the relationship between price and quantity in a tabular format vs demand curve
consumer's willingness to purchase in a market must be supported by the ability to make the purchase as evidenced by
necessary dollars
how do you get supply curve
horizontal adding supply curves of individual producers