Fundamentals
A condition that results from the inability of
limited resources to satisfy unlimited wants.
What is Scarcity?
The type of relationship between price and demand (the law of demand).
What is an inverse relationship?
An economic law that states that as supply increases, price increases.
What is the Law of Supply?
The intersection of supply and demand curves.
What is market equilibrium?
A maximum legal price that a good could be sold at.
What is price ceiling?
The value of the next-best forgone alternative.
What is Opportunity Cost?
The quantity of a good or service that some consumers that are willing and able to buy at a given price.
What is quantity demanded?
The summation of all of the producers’ quantity supplied for a good at a given price.
What is market supply?
A state of economic dis-equilibrium that results in quantity demanded being greater than quantity supplied.
Shortage
The minimum legal price that a good could be sold at.
What is a price floor?
A point under the PPF of a firm.
What is an Inefficient Allocation of Resources?
The five non-price determinants of demand.
What are taste and preferences, income of consumers, related goods' prices, expectations, and size of market?
The five non-price determinants of supply.
What are producer price expectations, input costs, number of suppliers, technology, and subsidies/taxes?
The result on equilibrium price and quantity when demand decreases.
What is both decrease?
The effect on the supply curve if the suppliers of textbooks are taxed $10 per textbook.
What is shift left by $10?
The law of rational marginal decision making.
What is MB > or = MC?
As consumers income increases, the demand for Teslas increases.
What is normal good?
The effect on the supply curve of farmers withholding some of their current corn harvest from the market because they anticipate a higher price of corn in the near future.
What is a leftward shift?
The effect on equilibrium price and quantity for the market for hot dogs when minimum wage for increases.
What is quantity decrease and price increase?
The description of the price control when the minimum price is below market equilibrium.
What is non-binding price floor?
Ann and Bob can produce water and rice, by using their available time to work. Working 1 hour, Ann can produce 6 gallons of water or 12 kilograms of rice.
Working 1 hour, Bob can produce 50 gallons of water or 150 kilograms of rice. Who has a comparative advantage in the production of producing water?
What is Ann?
An increase in the price of dinners at restaurants would
likely cause the demand curve for babysitters to shift __________.
This is because fancy dinners and babysitting services are
likely _____________.
What is left and compliments?
A market for guitars is composed of 150 producers/sellers. At a price of $1,000 per guitar, 50 of these producers/sellers are willing and able to sell 35 each. Each of the remaining producers/sellers are willing and able to sell 200 guitars at $1,000 per guitar. Give the quantity supplied at $1,000.
What is 21,750?
The effect on equilibrium price and quantity. Suppose mac and cheese is an inferior good and that mac and cheese consumers experience an increase in their income. Additionally, the technology used to produce mac and cheese has improved.
What is a decrease in price and unknown change in quantity?
The dis-equilibrium caused by a binding price ceiling.
What is a shortage?