Basic Microeconomics Flashcards

are goods that can be used in place of each other.

the father of modern economic analysis, greatly admired the price system.

He marveled at its accomplishments both as, an efficient producer of goods and as a guarantor that consumers' preferences are obeyed.

is the number of units of a good that consumers are willing and can afford to buy over a specified period of time.

is a table showing how the quantity demanded of same product during a specified period of time changes as the price of that product changes holding all other determinants of quantity demanded constant.

is a graphical depiction of a demand schedule.

It shows how the quantity demanded of some product will change as the price of that product changes during a specified period of time, holding all other determinants of quantity demanded constant.

occurs when any relevant variable other than price changes. If consumers want to buy more at any and all given prices than they wanted previously, the demand curve shifts to the right (or outward). If they desire less at any given price, the demand curve shifts to the left (or inward). 1) Consumer Income 2) Population 3) Consumer Preferences 4) Price and availability of related goods 5) Expectations+5 reasons of shift in demand curve

are commodities whose quantity demanded rises when the purchaser's real Income rises, all other things remaining equal. Inferior goods + are commodities whose quantity demanded falls when the purchaser's real income rises, all other things remaining equal

affects quantity demanded in more or less the same way as increases in average incomes.

refers to the specific choices and tastes of consumers when selecting products or services.

are goods that can be used in place of each other. Complements + are goods that are typically used together.

of future prices refer to the predictions or beliefs that producers hold about the future prices of their goods or services. These expectations are influenced by factors such as market trends, economic conditions, and government policies.

is the number of units that sellers want to sell over a specified period of time.

refers to the entire range of quantities that producers are willing and able to offer for sale at various prices over a specific period.

are tables showing how the quantity supplied of some products change as the price of those products change during a specified period of time, holding all other determinants of quantity supplied constant.

is a graphical depiction of a supply schedule. It shows how the quantity supplied of a product will change as the price of that product changes during a specified period of time, holding all other determinants of quantity supplied constant

occur when quantities of a product or service supplied change at every given price in response to other economic factors.

If more farmers enter the beef industry, the quantity supplied at any given price will increase

refers to the discovery of new and improved methods of producing goods.

are the costs incurred by businesses to secure the resources necessary for production or service provision.

Sometimes production of one thing also involves the production of other goods.

is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand —while an under-supply or shortage causes prices to go up resulting in less demand

FACTORS THAT DRIVES THE MARKET TOWARDS EQULIBRIUM

is an excess of quantity demanded over quantity supplied.

is an excess of quantity supplied over quantity demanded.

The forces of supply and demand generally push the price toward its equilibirum level, the price at which quantity supplied and quantity demanded are equal.

Individuals who engage in speculation deliberately store goods, hoping to obtain profits from future changes in the prices of these goods.

sell protection from risk to other people, much as a fire insurance policy offers protection from risk to a homeowner.

help to smooth out price fluctuations by purchasing items when they are abundant (and cheap) and holding them and reselling them when they are scarce (and expensive)

which set minimum prices, prevent prices from falling to market equilibrium levels.

This leads to a surplus where the quantity supplied exceeds the quantity demanded.

The unintended consequences of governmentimposed price controls, such as rent ceilings and price floors.

When prices are artificially set, shortages or surpluses arise. This creates situations where some people are favored over others in accessing limited goods, leading to potential discrimination and corruption.

Price controls are often difficult to enforce, especially in markets with many sellers. People find ways to circumvent the rules, and the true market price tends to re emerge. However, this evasion comes at a cost, usually borne by consumers in the form of higher prices.

To maintain price controls, governments often impose additional regulations, such as limiting who can buy from whom or restricting the entry of new businesses. This creates a complex and rigid system.

Price controls, both ceilings and floors, can lead to a decrease in the total number of goods and services exchanged in the market.

When prices are distorted by government intervention, resources are not used efficiently. Businesses may make irrational decisions, and efforts to circumvent controls consume valuable resources.

are goods that are typically used together.Complements + are goods that are typically used together.