We Supply it
You Demand it
You Demand it
The idea that as price goes up, quantity demanded will decrease
What is the Law of Demand?
This is the value of the benefit given up when you make a choice.
What is Opportunity Cost?
If supply shifts to the right, equilibrium price and quantity will change in this way.
What is price decreases, quantity increases?
This is the fundamental problem of economics.
What is Scarcity?
Sam can make 20 pies and 10 cakes. Preston can make 30 pies and 20 cakes. This person has the absolute advantage in the production of cakes.
Who is Preston?
A movement ALONG the supply curve is a change in this.
What is Quantity Supplied?
When one person or nation can produce something with a lower opportunity cost.
What is Comparative Advantage?
An abnormally cold winter would likely have this effect on the demand, price, and quantity of heaters.
What is demand, price, and quantity would increase?
These are the four factors of production.
What are Land, Labor, Capital, and Entrepreneurship?
If it takes Madison 2 hours to write an essay or 1 hour to complete her economics homework and it takes Samiah 3 hours to write an essay and 1 hour to complete her economics homework, this person has the absolute advantage in writing an essay.
Who is Madison? (She produces the same quantity of goods using fewer resources.)
The 5 determinants (shifters) of demand.
What are consumer tastes & preferences, change in income, change in the number of buyers, change in consumer expectations, and change in the price of related goods?
A production possibilites graph showing constant opportunity cost has this type of curve.
What is linear (straight line)?
Assuming that Ramen noodles are an inferior good, this would happen to the demand, equilibrium price and equilibrium quantity of Ramen noodles when consumer incomes increase.
What is the demand, equilibrium price, and equilibrium quantity would decrease?
You give up something to get something else.
What is a trade-off?
The United States produces 50 computers or 50 TVs per hour. China produces 30 computers or 40 TVs per hour. This country has the comparative advantage in producing TVs.
What is China? (1TV = 0.75C)
According to the law of demand, as price rises, this happens to quantity demanded.
What is decrease?
A production possibilities graph with increasing opportunity cost has this kind of curve.
What is concave (bowed out)?
The effect on the equilibrium price and quantity of iPhones when the price of Samsung Galaxy phones decreases dramatically.
What is equilibrium price and quantity both decrease?
These two things would lead to an outward shift of the PPC.
What is an increase in the quantity or quality of resources or a change in technology?
Belgium and France each produce 100 units of cheese and 100 units of chocolate. Belgium takes 10 hours to produce cheese and 20 hours to produce chocolate. France takes 10 hours to produce cheese, and 40 hours to produce chocolate. This nation has the comparative advantage in producing chocolate.
What is Belgium? (1 Chocolate = 2 Cheese)
If the price of cars significantly increases, then this will happen to the supply of cars.
What is nothing? (Price doesn't affect supply, it affects quantity supplied.)
This explains the law of increasing opportunity cost.
What is resources are incompatible (not adaptable)?
Steel is an important input in the production of minivans. This is the effect on the price of minivans if there is a strike by steelworkers.
What is the price of minivans would increase? (Since the supply of minivans would decrease due to an increase in input costs.)
This must be true in a market for a shortage to exist.
What is quantity demanded is greater than quantity supplied? or What is price is below equilibrium price?
This British economist first explained the principle of comparative advantage.
Who is David Ricardo?