Demand
When price for a product goes up, quantity demanded goes down.
What is the Law of Demand?
Higher prices will increase quantity supplied.
What is the Law of Supply?
The intersection of the demand and supply curve for a product.
What is Market Equilibrium?
The extra satisfaction gained by consumers from paying a price that is lower than the price they were prepared to pay.
What is Consumer Surplus?
What is Market Failure?
The same amount of tax per unit sold.
What is a Specific Tax?
Any good for which demand increases when income increases.
What is a Normal Good?
The capital, enterprise, land, and labor required to make any product.
What are Factors of Production?
Price is above the market price, quantity supplied is higher than quantity demanded. In this case, there will be _________ _________
What is Excess Supply?
The excess of actual earnings that a producer makes from a given quantity of output above the amount a producer would be willing to accept for that output.
What is Producer Surplus?
Goods of which the consumption has negative consequences on society.
What are Demerit Goods?
A tool by the government that forces producers to sell goods for a fixed price.
What are Price Controls?
Goods for which demand decreases when income increases.
What is an Inferior Good?
What are Indirect Taxes?
Price is below the market price, quantity supplied is lower than quantity demanded. In this case, there will be _________ _________
What is Excess Demand?
Used to measure the effect a change in price has on the demand for a certain good.
PED = %ΔQd ÷ %ΔP
What is Price Elasticity of Demand?
Goods of which the consumption has positive consequences on society.
What are Merit Goods?
The government sets a maximum price, which lies below the equilibrium price. Leads to a shortage.
What is a Price Ceiling (max. price)?
A good that is consumed along with another good. Example would be cars and fuel.
What is a Complementary Good?
Government money given to producers.
What are Subsidies?
A high price is a signal to producers that consumers want to buy the good.
What is the Signaling Function?
Used to measure the effect a change in price has on the supply for a certain good.
PES = %Change in Quantity Supplied ➗ %Change in Price
What is Price Elasticity of Supply?
Goods that are non-rivalrous and non-excludable.
What are Public Goods?
The government sets a price which lies above the equilibrium price. Leads to a surplus.
What is a Price Floor (Minimum Price)?
A good that is consumed instead of another good. Like iPhones vs. Samsungs.
What is a Substitute Good?
When the prices of related goods increase, producers will feel _____ (more/less) confident on selling their goods so they will _____ (increase/decrease) their production and supply.
What is Less Confident and Decrease their supply?
A higher price is an incentive for producers to produce more to increase profit.
What is the Incentive Function?
Used to measure the effect a change in income of consumers has on the demand for a certain product.
YED = %Change in QD ➗%Change in Income
What is Income Elasticity of Demand?
Resources that everyone has access to so it is very hard to exclude people from using them.
What are Common Access Resources?
The market won't be at equilibrium, consumer and producer surplus are not maximized.
What is Welfare Loss?