Basics of Supply and Demand
Elasticity & Market Shifters
Equilibrium & Market Failures
Market Structures
Vocabulary
100
If the supply curve shifts to the right, what is happening to supply?
It is increasing
100
Goods such as gasoline, where demand is not likely to change with price, demonstrate this type of demand:
What is inelastic demand?
100
The equilibrium quantity is ____
~70
100
In this cartoon, Standard Oil represents what kind of market structure?
Monopoly
100
The line "You can't always get what you want" exemplifies this basic economic principle.
Scarcity
200
According to the Law of Supply, as price increases, supply _____
Increases
200
Headline: "Experts predict the price of gasoline will rise 50% next week."
What will happen to consumer demand for gasoline during the week BEFORE the expected price increase?
It will increase/shift to the right
200
If goods are being bought and sold at the Equilibrium Point, that means that Supply and Demand are...
Equal
200
In this market structure, a few competing firms selling similar products dominate an industry and make it very difficult for other businesses to compete.
Oligopoly
200
The minimum wage is an example of this type of price control:
Price floor
300
In order to be considered to be a part of the market, a producer must be ______ and _______ to produce the product
Willing and able
300
Price of Complementary Goods
300
Bridgette decides to clean up her front yard to make room for a bench. In addition to making room for the bench, the neighborhood is now much prettier!
The above scenario is an example of a(n) _________
(Positive) externality
300
This market structure is characterized by having one DOMINANT business in an industry with many smaller, competing brands underneath them.
Monopolistic competition
300
If a business is able to easily change the price of a good without losing many customers, it has _____ _____
Market Power
400
If the percentage change in price is EXACTLY the same as the percentage change in demand, then a good has ______ _______ Demand.
Unitary elastic (demand)
400
HEADLINE: "Newest X Box console to be nearly 20% more expensive!"
What will happen to demand for the newest Playstation? What Demand Shifter is being demonstrated?
Demand will increase. Change in the price of Substitute Goods.
400
This type of price control often results in shortages of goods.
Price ceilings
400
The market for apples best reflects this market structure:
Perfect competition
400
This term describes why large businesses like Wal-Mart are able to reliably outcompete smaller businesses.
Economy of Scale
500
Explain the difference between a Supply Schedule and Supply Curve.
A supply schedule is a chart that lists producers' willingness and ability to produce at certain prices. Supply Curve is that info charted onto a graph.
500
Price (never shifts the curve, only moves along it)
500
Based on what we learned in class about the shift from Gros-Michel to Cavendish type bananas, what was a negative externality of producers investing so heavily in a single type of banana?
The spread of Panama Disease/mass death of Gros-Michel type bananas.
500
In a game of Monopoly, a player can develop a monopoly by doing this:
Purchasing all of one color of property/utility OR purchasing all of one side of the board.
500
Why do price controls usually disrupt market equilibrium?
They force the price/quantity above/below equilibrium.