Demand
if price increases quantity demanded will go down
law of demand
if price increases then the quantity supplied will increase
law of supply
if P = $4 then this occurs:
[[P,Qd,Qs],[3,140,80],[4,120,90],[5,100,100],[6,80,110],[7,60,120]]
shortage
This measures the sensitivity of consumers' quantity demanded to a good when the price of the good changes
price elasticity of demand
having a lower opportunity cost for a good gives a producer this 'advantage'
comparative advantage
This effects demand as a result of a change in consumer's purchasing power (or real income)
income effect
The expected effect on the market if there were a decrease in the cost of an input.
Increase (right shift) in supply
if P = $6 then this occurs:
[[P,Qd,Qs],[3,140,80],[4,120,90],[5,100,100],[6,80,110],[7,60,120]]
surplus
(%DeltaQd)>(%DeltaP)
Price elastic demand
Sally and Mike decide to cooperate on their homework. Sally can complete a chemistry homework assignment in 2 hours and a biology assignment in 1 hour. Mike can complete a biology assignment in 90 minutes and a chemistry assignment in 2 and one half hours. This person should do the chemistry assignments.
Mike
The numeric (table) representation of a Demand Function
demand schedule
This 'bottom line' is assumed to be the primary motivator to producers.
profit
this price P 'clears the market'
[[P,Qd,Qs],[3,140,80],[4,120,90],[5,100,100],[6,80,110],[7,60,120]]
$5
(%DeltaQd)<(%DeltaP)
Price inelastic demand
Larry decides to not go to his bicycle repair job which pays him $15 an hour and decides rather to see a 2 hour movie. He purchases a $15 ticket and a 'bucket' of popcorn for $15. What was Larry's total economic cost for this activity?
$60
The effect of a tax increase in a market
decrease (left shift) in demand
Product A is an input to Product B which is a substitute for Product C.
An increase in the price of Product A has this effect on Product C.
increase in demand
The change in equilibrium price resulting from an increase in supply and a decrease in demand
decrease
Current given conditions:
Price = $4, quantity demanded = 100,000
if the elasticity of demand = 0.4 and the price changes to $6, this will be the new quantity demanded.
84,000
Assuming that with respect to production, soccer balls and basketballs are substitutes. An increase in basketball prices would have this effect on the soccer ball market.
decrease in supply
A good whose demand decreases with an increase in consumer income
inferior good
The widespread propagation of a damaging computer virus would have this effect the power generation market.
decrease in supply
The change in equilibrium quantity resulting from an increase in supply and a decrease in demand
undetermined
This condition exists if buyers in a market absolutely must buy a fixed quantity of a good or service no matter the cost.
perfectly inelastic demand
In a two market economy, a constant opportunity cost will appear as this type of Production Possibility Curve.
Linear