question
Law of Demand
answer
All else equal, the quantity demanded of a good decreases when the price of a good increases
question
Change in Quantity Demanded
answer
Occurs when the price of the good itself currently changes. P⬆️Qd⬇️
question
Change in Demand
answer
Change in
•income
•price of related goods
•tastes
•buyers expectations
•# of buyers
•income
•price of related goods
•tastes
•buyers expectations
•# of buyers
question
Change in income
answer
(Demand)
Normal goods:
Income rises, demand rises
Income falls, Demand falls
Inferior goods:
Income rises, Demand falls
Normal goods:
Income rises, demand rises
Income falls, Demand falls
Inferior goods:
Income rises, Demand falls
question
Change in tastes
answer
(Demand)
Rise in taste rise in Demand
Rise in taste rise in Demand
question
Change in # of Buyers
answer
(Demand)
# of buyers⬆️ Demand ⬆️
# of buyers⬆️ Demand ⬆️
question
Change in price of related goods
answer
(Demand)
Substitutes:
Increase of price in a sub, increase in demand for the other
Complements:
Increase of price in a comp, decrease in demand for the other
Substitutes:
Increase of price in a sub, increase in demand for the other
Complements:
Increase of price in a comp, decrease in demand for the other
question
Change in Buyers Expectation
answer
(Demand)
If a buyer expects the price of a good to rise in the future, they will buy more now
If a buyer expects the price of a good to rise in the future, they will buy more now
question
Law of Supply
answer
All else equal, the quantity supplied of a good increases when the price of the good increases
question
change in quantity supplied
answer
Occurs when the price of the good itself, currently changes
question
Change in supply
answer
Change in
•inputs
•technology
•sellers expectations
•# of sellers
•inputs
•technology
•sellers expectations
•# of sellers
question
Change in Input
answer
(Supply)
Input price ⬆️ supply⬇️
Input price ⬆️ supply⬇️
question
Change in Technology
answer
(Supply)
Technology advance, supply increases
Technology decreases, supply decreases
Technology advance, supply increases
Technology decreases, supply decreases
question
Change in Sellers expectations
answer
(Supply)
If a seller expects the price of his good to rise in the future, he will supply less now
If a seller expects the price of his good to rise in the future, he will supply less now
question
Change in # of sellers
answer
(Supply)
# of sellers⬆️ supply⬆️
# of sellers⬆️ supply⬆️
question
Determinists of Elasticity
answer
•many substitutes
•luxuries
•longtime horizon
•narrow market
•large portion of the budget
•luxuries
•longtime horizon
•narrow market
•large portion of the budget
question
Determinants of Inelasticty
answer
•few substitutes
•necessities
•short time horizon
•broad market
•small portion of the budget
•necessities
•short time horizon
•broad market
•small portion of the budget
question
Surplus
answer
Qs > Qd
To remove, seller will decrease price until it reaches P*
To remove, seller will decrease price until it reaches P*
question
Shortage
answer
Qs < Qd
To remove, seller will increase price until it reaches P*
To remove, seller will increase price until it reaches P*
question
Elastic
answer
Greater than 1
P⬆️ TR⬇️
P⬆️ TR⬇️
question
Inelastic
answer
Less than 1
P⬆️ TR⬆️
P⬆️ TR⬆️
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
