question
demand
answer
willingness and ability to pay
It refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant
It refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant
question
law of demand
answer
Quantity demanded rises as price falls, other things held constant.
question
As price increases, people will begin to what?
answer
Substitute other goods
question
demand curve
answer
The graphic representation of the relationship between price and quantity demanded. It slopes down because price and quantity demanded are inversely related.
question
quantity demanded
answer
A specific amount that will be demanded per unit of time at a specific price, other things constant. It tells us how much will be bought at a specific price, a point on the demand curve.
question
movement along a demand curve
answer
the graphical representation of the effect of a change in price on the quantity demanded
question
shift in demand
answer
the graphical representation of the effect of anything other than price on demand, shift factors
question
Shift Factors of Demand
answer
1. Income
2. Price of other goods
3. Tastes
4. Expectation
5. Taxes on and subsided to consumers
2. Price of other goods
3. Tastes
4. Expectation
5. Taxes on and subsided to consumers
question
How income affects demand
answer
If income goes up, then the demand for normal goods rises. If income goes down, then the demand for inferior goods rises.
question
How prices of other goods affects demand
answer
Substitutes: The price of one good rises, then people by other goods
Compliments: If the price for one good declines, then the demand for its compliment increases.
Compliments: If the price for one good declines, then the demand for its compliment increases.
question
market demand curve
answer
the horizontal sum of all individual demand curves
question
supply
answer
the ability and willingness to supply a resource or good
question
law of supply
answer
Quantity supplied rises as price rises, other things held constant
question
supply curve
answer
the graphical representation of the relationship between price and quantity supplied
question
supply
answer
a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant
question
quantity supplied
answer
a specific amount that will be supplied at a specific price
question
movement along a supply curve
answer
the graphical representation of the effect of a change in price on the quantity supplied
question
shift in supply
answer
the effect of a change in a factor other than price on supply
question
Shift Factors of Supply
answer
1. Price of inputs
2. Technology
3. Expectations
4. Taxes and Subsidies
2. Technology
3. Expectations
4. Taxes and Subsidies
question
equilibrium
answer
point where supply and demand intersects
Quantity supplied equals quantity demanded, prices have no tendency to change
Quantity supplied equals quantity demanded, prices have no tendency to change
question
equilibrium quantity
answer
the amount of bought and sold at the equilibrium
question
equilibrium price
answer
the price toward which the invisible hand drives the market
question
surplus
answer
quantity supplied is greater than quantity demanded
question
shortage
answer
quantity demanded is greater than quantity supplied
question
Why do the laws of supply and demand hold true?
answer
Individuals can substitute
question
What happens when the demand curve shifts to the right?
answer
Equilibrium price rises and equilibrium quantity rises
question
What happens when the demand curve shifts to the left?
answer
Equilibrium price falls, and equilibrium quantity falls
question
What happens when the supply curve shifts to the right?
answer
Equilibrium price declines and equilibrium quantity rises
question
What happens when the supply curve shifts to the left?
answer
Equilibrium price rises and equilibrium quantity falls
question
exchange rates
answer
the price of one country's currency in terms of another's currency
question
What determines exchange rates?
answer
It is the same as the determination of price. A currency is just another good. People demand currencies of other countries to buy those countries' goods and assets
question
Why did the value of the euro rise in the 2000s?
answer
Because the U.S. economy entered a recession, and because U.S. interest rates fell, Europeans bought fewer U.S. financial rates fell. That meant they supplied fewer euros because they needed to buy fewer U.S. dollars. At the same time, Americans also decided to buy more european stocks and bonds because european interest rates were relatively higher, as did other countries.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
