Supply and Demand - Assignment Essays

question

Law of Demand

answer

As the price of a good rises (falls) and all other things remain constant, the quantity demanded of the good falls (rises).

question

Change in Quantity Demanded

answer

Changes in the price of a good lead to a change in the quantity demanded of that good. This corresponds to a movement along a given demand curve.

question

Change in Demand

answer

Changes in variables other than the price of a good, such as income or the price of another good, lead to a change in demand. This corresponds to a shift of the entire demand curve.

question

Normal Good

answer

A good for which an increase (decrease) in income leads to an increase (decrease) in the demand for that good.

question

Inferior Good

answer

A good for which an increase (decrease) in income leads to a decrease (increase) in the demand for that good.

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Substitutes

answer

Goods for which an increase (decrease) in the price of one good leads to an increase (decrease) in the demand for the other good.

question

Complements

answer

Goods for which an increase (decrease) in the price of one good leads to a decrease (increase) in the demand for the other good.

question

Demand Function

answer

A function that describes how much of a good will be purchased at alternative prices of that good and related goods, alternative income levels, and alternative values of other variables affecting demand.

question

Linear Demand Function

answer

A representation of the demand function in which the demand for a given good is a linear function of prices, income levels, and other variables influencing demand.

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Consumer Surplus

answer

The value consumers get from a good but do not have to pay for.

question

Market Supply Curve

answer

A curve indicating the total quantity of a good that all producers in a competitive market would produce at each price, holding input prices, technology, and other variables affecting supply constant.

question

Change in Quantity Supplied

answer

Changes in the price of a good lead to a change in the quantity supplied of that good. This corresponds to a movement along a given supply curve.

question

Law of Supply

answer

As the price of a good rises (falls) and other things remain constant, the quantity supplied of the good rises (falls).

question

Supply Shifters

answer

variables that affect the position of the supply curve

question

Change in Supply

answer

Changes in variables other than the price of a good, such as input prices or technological advances, lead to a change in supply. This corresponds to a shift of the entire supply curve.

question

Exise Tax

answer

a tax on the production or sale of a good

question

ad volrem tax

answer

Sells tax is a good example of this

question

Supply Function

answer

A function that describes how much of a good will be produced at alternative prices of that good, alternative input prices, and alternative values of other variables affecting supply.

question

Linear Supply Function

answer

An equation in the form Qs = c + dP which shows the relationship between the price and the quantity of a product supplied.

question

Producer Surplus

answer

the amount a seller is paid for a good minus the seller's cost of providing it

question

price ceiling

answer

The maximum legal price that can be charged in a market.

question

The Full Economic Power

answer

The dollar amount paid to a firm under a price ceiling, plus the nonpecuniary price.

question

Price Floor

answer

The minimum legal price that can be charged in a market.

question

Price Support

answer

the government would buy surplus crops at guaranteed prices and sell them on the world market

question

Comparative static analysis

answer

the study of the movement from one equilibrium to another

question

Elasticity

answer

A measure of the responsiveness of one variable to changes in another variable; the percentage change in one variable that arises due to a given percentage change in another variable.

question

own price elasticity of demand

answer

A measure of the responsiveness of the quantity demanded of a good to a change in the price of that good; the percentage change in quantity demanded divided by the percentage change in the price of the good.

question

Elastic

answer

Demand is elastic if the absolute value of the own price elasticity is greater than 1.

question

Inelastic Demand

answer

Demand is inelastic if the absolute value of the own price elasticity is less than 1.

question

Unitary Demand

answer

Demand is unitary elastic if the absolute value of the own price elasticity is equal to 1.

question

Total Revenue Test

answer

The relationship between changes in price, elasticity and total revenue

-If demand is elastic then a increase in price will lead to a decrease in total revenue

question

Perfectly Elastic

answer

Demand is perfectly elastic if the own price elasticity is infinite in absolute value. In this case the demand curve is horizontal.

question

Perfectly Inelastic

answer

Demand is perfectly inelastic if the own price elasticity is zero. In this case the demand curve is vertical.

question

Changes in Demand

answer

-Shifts to the right is an increase and Shifts to the left is a decrease.

Determinants of Demand

-Income: Normal or Inferior Good

-Prices of Related Goods: Substitutes and Compliments

-Advertising and Consumer Tastes: Anything that causes a shift in taste toward a good will increase demand for that good

-Population: As the population rises more individuals will purchase goods.

-Consumer expectations: Expection affect buyers

question

Demand Funcation

answer

-Total consumer value: sum of the max amount a consumer is willing to pay at different quantities

-Total Expenditure: is the per unit market price times the number of units consumed

-Consumer Surplus: The extra value that consumers derive from a good but do not pay extra for

question

Linear Demand Function

answer

-Input Prices

-Technology or government regulations

-Number of Firms

-Substitutes in production

-Taxes - Decrease the Supply: Excise tax (Tax collected on each unit of out put from the supplier), shifts the supply curve vertically up. Ad Valorem Tax: (A percentage tax, for example - sales tax), rotates the supply curve counter clockwise.

-Producer expectations

question

Linear Demand Function Continued

answer

- Determined by the intersection of the market demand and market supply curve

-Equilibrium price that equates quantity demanded with quantity supplied

question

Consumer Surplus

answer

-Increase in demand only: increase in equilibrium price and quantity

-Decrease in Demand Only: Decrease in equilibrium price and quantity

question

Supply Shifters

answer

-Increase in Supply Only: Decrease in equilibrium price and increase in Equilibrium quantity

_Decrease in supply only: Increase in equilibrium price and decrease in equilibrium quantity.

question

Competitive Market Equilibrium

answer

A measure of the responsiveness of the demand for a good to changes in the price of a related good; the percentage change in the quantity demanded of one good divided by the percentage change in the price of a related good.

question

Changes in Demand

answer

A measure of the responsiveness of the demand for a good to changes in consumer income; the percentage change in quantity demanded divided by the percentage change in income.

question

Changes in Supply

answer

is the ration of the percentage change in the consumption of X to the percentage change in advertising spent on X

question

Simultaneous Shifts

answer

Measure the percentage change in the consumption of X hat results from a 1 percent change in advertising directed towards Y

question

Cross-price Elasticity

answer

-The elasticity between two variables, G and S, is mathematically expressed as: See attached image

If elasticity is greater than 0 then S and G are directly related.

If elasticity is less than 0 then S and G are inversely related.

question

Income Elasticity

answer

-Sign of the relationship: Positive or Negative

-Absolute Value of elasticity magnitude relative to unity: | Eg,s | greater than 1 G is highly responsive to changes in S

| Eg,s | less than 1 G is slightly responsive to changes in S

question

Own Adverting Elasticity

answer

Measures the responsiveness of a percentage change in the quantity demanded of good X to a percentage change in its price.

-Sign: negative by the law of demand

The magnitude of absolute value relative to unity:

An absolute value less than 1 is inelastic if it is greater than 1 it is elastic, if it is equal to 1 then it is unitary elastic

question

Cross-Advertising Elasticity

answer

-When demand is elastic: a price increase (decrease) leads to a decrease (increase) in total revenue

-When demand in inelastic: A price increase (decrease) leads to an increase (decrease) in total revenue

-When demand is unitary elastic: Total revenue is maximized.

question

The Elasticity Concept

answer

A function that defines the maximum amount of output that can be produced with a given set of inputs.

- Q = F(K,L)

question

Alternative way to measure the elasticity of a function G = f(s )

answer

The inputs a manager cannot adjust in the short run.

question

Measurement Aspects of Elasticity

answer

The inputs a manager can adjust to alter production.

*Usually inputs such as labor and materials.

question

own price elasticity of demand

answer

Is the time frame in which there are fixed factors of production.

question

Total Revenue Test

answer

Q = f(L) = f(K*,L)

- *K is the fixed level of capital.

question

Production Function

answer

...

question

Fixed Factors of Production

answer

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question

Variable Factors of Production

answer

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question

Short Run

answer

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question

Short Run Production Function Formula

answer

undefined

question

Long Run

answer

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1 of 58

question

Law of Demand

answer

As the price of a good rises (falls) and all other things remain constant, the quantity demanded of the good falls (rises).

question

Change in Quantity Demanded

answer

Changes in the price of a good lead to a change in the quantity demanded of that good. This corresponds to a movement along a given demand curve.

question

Change in Demand

answer

Changes in variables other than the price of a good, such as income or the price of another good, lead to a change in demand. This corresponds to a shift of the entire demand curve.

question

Normal Good

answer

A good for which an increase (decrease) in income leads to an increase (decrease) in the demand for that good.

question

Inferior Good

answer

A good for which an increase (decrease) in income leads to a decrease (increase) in the demand for that good.

question

Substitutes

answer

Goods for which an increase (decrease) in the price of one good leads to an increase (decrease) in the demand for the other good.

question

Complements

answer

Goods for which an increase (decrease) in the price of one good leads to a decrease (increase) in the demand for the other good.

question

Demand Function

answer

question

Linear Demand Function

answer

A representation of the demand function in which the demand for a given good is a linear function of prices, income levels, and other variables influencing demand.

question

Consumer Surplus

answer

The value consumers get from a good but do not have to pay for.

question

Market Supply Curve

answer

question

Change in Quantity Supplied

answer

Changes in the price of a good lead to a change in the quantity supplied of that good. This corresponds to a movement along a given supply curve.

question

Law of Supply

answer

As the price of a good rises (falls) and other things remain constant, the quantity supplied of the good rises (falls).

question

Supply Shifters

answer

variables that affect the position of the supply curve

question

Change in Supply

answer

Changes in variables other than the price of a good, such as input prices or technological advances, lead to a change in supply. This corresponds to a shift of the entire supply curve.

question

Exise Tax

answer

a tax on the production or sale of a good

question

ad volrem tax

answer

Sells tax is a good example of this

question

Supply Function

answer

A function that describes how much of a good will be produced at alternative prices of that good, alternative input prices, and alternative values of other variables affecting supply.

question

Linear Supply Function

answer

An equation in the form Qs = c + dP which shows the relationship between the price and the quantity of a product supplied.

question

Producer Surplus

answer

the amount a seller is paid for a good minus the seller's cost of providing it

question

price ceiling

answer

The maximum legal price that can be charged in a market.

question

The Full Economic Power

answer

The dollar amount paid to a firm under a price ceiling, plus the nonpecuniary price.

question

Price Floor

answer

The minimum legal price that can be charged in a market.

question

Price Support

answer

the government would buy surplus crops at guaranteed prices and sell them on the world market

question

Comparative static analysis

answer

the study of the movement from one equilibrium to another

question

Elasticity

answer

A measure of the responsiveness of one variable to changes in another variable; the percentage change in one variable that arises due to a given percentage change in another variable.

question

own price elasticity of demand

answer

question

Elastic

answer

Demand is elastic if the absolute value of the own price elasticity is greater than 1.

question

Inelastic Demand

answer

Demand is inelastic if the absolute value of the own price elasticity is less than 1.

question

Unitary Demand

answer

Demand is unitary elastic if the absolute value of the own price elasticity is equal to 1.

question

Total Revenue Test

answer

The relationship between changes in price, elasticity and total revenue

-If demand is elastic then a increase in price will lead to a decrease in total revenue

question

Perfectly Elastic

answer

Demand is perfectly elastic if the own price elasticity is infinite in absolute value. In this case the demand curve is horizontal.

question

Perfectly Inelastic

answer

Demand is perfectly inelastic if the own price elasticity is zero. In this case the demand curve is vertical.

question

Changes in Demand

answer

-Shifts to the right is an increase and Shifts to the left is a decrease.

Determinants of Demand

-Income: Normal or Inferior Good

-Prices of Related Goods: Substitutes and Compliments

-Advertising and Consumer Tastes: Anything that causes a shift in taste toward a good will increase demand for that good

-Population: As the population rises more individuals will purchase goods.

-Consumer expectations: Expection affect buyers

question

Demand Funcation

answer

-Total consumer value: sum of the max amount a consumer is willing to pay at different quantities

-Total Expenditure: is the per unit market price times the number of units consumed

-Consumer Surplus: The extra value that consumers derive from a good but do not pay extra for

question

Linear Demand Function

answer

-Input Prices

-Technology or government regulations

-Number of Firms

-Substitutes in production

-Producer expectations

question

Linear Demand Function Continued

answer

- Determined by the intersection of the market demand and market supply curve

-Equilibrium price that equates quantity demanded with quantity supplied

question

Consumer Surplus

answer

-Increase in demand only: increase in equilibrium price and quantity

-Decrease in Demand Only: Decrease in equilibrium price and quantity

question

Supply Shifters

answer

-Increase in Supply Only: Decrease in equilibrium price and increase in Equilibrium quantity

_Decrease in supply only: Increase in equilibrium price and decrease in equilibrium quantity.

question

Competitive Market Equilibrium

answer

question

Changes in Demand

answer

A measure of the responsiveness of the demand for a good to changes in consumer income; the percentage change in quantity demanded divided by the percentage change in income.

question

Changes in Supply

answer

is the ration of the percentage change in the consumption of X to the percentage change in advertising spent on X

question

Simultaneous Shifts

answer

Measure the percentage change in the consumption of X hat results from a 1 percent change in advertising directed towards Y

question

Cross-price Elasticity

answer

-The elasticity between two variables, G and S, is mathematically expressed as: See attached image

If elasticity is greater than 0 then S and G are directly related.

If elasticity is less than 0 then S and G are inversely related.

question

Income Elasticity

answer

-Sign of the relationship: Positive or Negative

-Absolute Value of elasticity magnitude relative to unity: | Eg,s | greater than 1 G is highly responsive to changes in S

| Eg,s | less than 1 G is slightly responsive to changes in S

question

Own Adverting Elasticity

answer

Measures the responsiveness of a percentage change in the quantity demanded of good X to a percentage change in its price.

-Sign: negative by the law of demand

The magnitude of absolute value relative to unity:

An absolute value less than 1 is inelastic if it is greater than 1 it is elastic, if it is equal to 1 then it is unitary elastic

question

Cross-Advertising Elasticity

answer

-When demand is elastic: a price increase (decrease) leads to a decrease (increase) in total revenue

-When demand in inelastic: A price increase (decrease) leads to an increase (decrease) in total revenue

-When demand is unitary elastic: Total revenue is maximized.

question

The Elasticity Concept

answer

A function that defines the maximum amount of output that can be produced with a given set of inputs.

- Q = F(K,L)

question

Alternative way to measure the elasticity of a function G = f(s )

answer

The inputs a manager cannot adjust in the short run.

question

Measurement Aspects of Elasticity

answer

The inputs a manager can adjust to alter production.

*Usually inputs such as labor and materials.

question

own price elasticity of demand

answer

Is the time frame in which there are fixed factors of production.

question

Total Revenue Test

answer

Q = f(L) = f(K*,L)

- *K is the fixed level of capital.

question

Production Function

answer

...

question

Fixed Factors of Production

answer

undefined

question

Variable Factors of Production

answer

undefined

question

Short Run

answer

undefined

question

Short Run Production Function Formula

answer

undefined

question

Long Run

answer

undefined

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