Microeconomics Chapter 3 Test- Townsend

Anywhere the buyers and sellers can interact to work out an exchange

The amount that consumers are willing and able to purchase at all possible prices; need resources to obtain; possible prices are never at zero

Price and quantity demanded have an inverse relationship; price is the independent variable

Three reasons why the Law of Demand stands true

Set money income and when they alter the price, they alter your purchasing power

When they alter the price, we buy the relatively cheaper product

The additional use of a certain product makes your satisfaction of that product go down

Change in the exact amount that is demanded in a given market caused by a price change in the product we are analyzing; shown by moving a point on the curve (quantity-price-point)

When you have a change in the amount demanded at all possible prices in a given market; caused by something other than price change; showed by moving a curve

1. Taste in Preferences
2. Income
3. Expectations
4. Number of Buyers
5. Complimentary Goods
6. Substitute Goods

What people want or are told; Direct relationship with Demand

More money, more stuff but you treat certain products differently; Two Products: Normal goods which has a direct relationship with demand and Inferior goods which has an inverse relationship with demand

What you expect the price to be; If the buyer were to expect a positive event (lower prices) in the future, the demand would decrease today; if a negative event (prices raised) the demand would increase today

Direct relationship; If the number of people buying goes up, demand will go up and vice versa

Two goods work together; Compare price of one good to demand of other; the price of one good has an inverse relationship to the demand of its complimentary good (if the price of peanut butter goes up, the demand of jelly will go down)

One good that can take the place of another good; If the price goes up on one good, the demand of the substitute will go up; the price of one good has a direct relationship to the demand of another good

The amount that producers are willing and able to provide at all possible prices

Price and quantity supplied have a direct relationship

A change in the exact amount that is supplied in a given market; caused by a price change in the product we are analyzing; shown by moving a point on a curve (quantity-price-point)

When you have a change in the amount supplied at all possible prices in a given market; caused by something other than a price change; shown by moving a curve

1. Cost of Input
2. Number of Producers
3. Technology
4. Productivity
5. Government Regulations
6. Price of Other Good
7. Expectations
8. Taxes and Subsidies

When cost of the resource/input goes up, supply goes down and vice versa; inputs are resources (labor is the most expensive resource)

Increase number of sellers, increase supply; direct relationship

Direct relationship; add technology, increase supply/lose technology, decrease supply

Direct relationship; if people are working efficiently, supply goes up/if people aren't working efficiently, then supply will go down

Inverse relationship; Increase the control government has over regulations then the supply will decrease; If there is a decrease, then the supply will increase

Price of other goods you could produce goes up, the supply of another goes down

If a positive event (which is higher prices) is expected in the future, producers will decrease the supply today; but if a negative event is expected in the future (lower prices) then the producers will increase the supply today

When money is taken away from industries and businesses; increase taxes, decrease supply-cut taxes, increase supply; inverse relationship

What the government pays to help certain products and to help with shortages; government gives money, supply goes up and vice versa; direct relationship

What is the most subsidized agricultural product?

When the quantity demanded is greater than the quantity supplied

When the quantity supplied is greater than the quantity demanded

A minimum price to pay for the product; placed above equilibrium; This is to help the producers/the supply side; creates a surplus

A maximum price to pay for the product; located below equilibrium; creates a shortage and is there to help consumers

Forcing units into the market and out of the market at the same time; this happens every time the price changes

If both the supply curve and the demand curve move in the same direction, you cannot determine what happens to?

If the supply curve and the demand curve are moving in the opposite directions, you cannot determine what happens to?