Ch 2 Readings
Adam Smith feels this determines the price of a good
What is LABOR (used)?
This portion of a graph has an equation with a negative coefficient before the quantity, and often slopes downward.
What is DEMAND?
This type of restriction occurs when a price can't rise any higher.
What is a Price CEILING?
The shape of a demand curve that is very elastic, is this.
What is HORIZONTAL?
Carl Menger said the price of a good should be determined by this.
What is VALUE (judgement)?
In the short run, Supply is often, this.
What is FIXED (or restricted)?
The lowest a price of a good can drop to, either naturally or imposed by reguilation.
What is a Price FLOOR?
If a good is completely necessary, the vertical demand curve is considered this.
What is INELASTIC?
Frederic Bastiat said when a window gets broken, the loss is not only felt by the cost of repair, but also this
What is "lost opportunity to spend elsewhere"?
This is the name of the point on a graph where Supply and Demand curves cross.
What is EQUILIBRIUM?
When a price cannot drop below a certain amount that is ABOVE the natural market price, this market failure occurs.
What is a SURPLUS?
These are the reasons (determinates) that contribute to elasticity of demand
What are "Time Constraints", "Number of Substitutes", "Percent of Income", "Perceived Necessity" and "Narrowness of Market"?
The longer we see rent control, the effects worsen, in part because of this naturally occurring trend in the economy.
What is INFLATION?
A "market price" is this type of consequence when everyone acts in their own interest
If a price ceiling is set too low, this type of market failure will occur.
What is a SHORTAGE?
This common math term for graphing lines, is what we look at to determine how high or low the elasticity is.
What is SLOPE?
Thomas Aquinas talks about whether it should be a "sin" to charge more than something is worth. This is why he says that it is of no concern (to the Church).
What is "buyers are willing to pay what something is worth to them"?
When a supplier leaves the market, this line moves in this direction on the supply and demand graph.
What is "The Supply Curve moves to the left"
This is experienced by sellers who are able to sell their good for a price above what they were willing to.
What is PRODUCER SURPLUS?
This is why the demand curve is often drawn as curved instead of a straight line.
What is DIMINISHING MARGINAL RETURNS?