Supply and Demand Factors
The point where supply and demand meet
Equilibrium
Necessities like water and electricity tend to have this type of demand.
Inelastic Demand
This rainforest produces about 20% of the world’s oxygen.
When a market fails to reach equilibrium, there is
Inefficiency - Deadweight loss
Boardgame named after a certain type of market where one firm dominates
Monopoly
For this curve, as prices rise, quantity increases.
Supply curve
A good with an elasticity coefficient of exactly 1 is classified as this.
Unit Elastic
This country spans the most time zones, with a total of 11.
Russia
A price ceiling below equilibrium results in this market outcome.
Shortage
A market with a small number of dominant firms
Oligopoly
List 3 non-price factors of demand (100 points each)
Income
Subsitutes
Complements
Consumer Preference
Demand Shocks
A vertical demand curve means a good is ________________
Perfectly inelastic
This Roman leader was once kidnapped by pirates and told them to demand a higher ransom.
Julius Caesar
Illicit market that occurs when shortages exist
Black Market
List three assumptions of a competitive market? (100 per)
Low barrier to entry
Many firms
Homogenous goods (goods are the same)
Large number of buyers and sellers
Firms are price takers
Perfect information
If the price of coffee rises, demand for tea might increase due to this factor.
Price of Substitutes
Provide an example of a good with relatively elastic demand. (200)
Provide an example of a good with relatively inelastic demand. (200)
Elastic - Fruit and veg, luxury goods
Inelastic - Petrol, necessities
This British pig has been banned in some countries for "promoting bad manners."
Peppa Pig
The effect on consumer and producer surplus when a price floor is instituted.
Consumer surplus decreases, Producer surplus increases
When firms in an oligopoly collude to fix prices, such as with OPEC, or Illicit drugs, they are operating as a _________
Cartel
The price of a substitute good increases. Which curve shifts, and what direction (left or right)?
Demand curve shifts to the right - Buyers stop buying substitute to buy the cheaper alternative, shifting demand right.
A formula for calculating elasticity
%△Q/%△P
OR
△Q/Q x P/△P
The Australian Senate has this many members.
76
Provide 5 examples of government policy that can result in inefficiency (deadweight loss) - 100 points each
Price ceiling, price floor, market regulation, taxes, subsidy
What firms try to do to make their product stand out, reducing competitiveness in the market.
Product Differentiation