Lynch Economics Unit 2 (Trivia Version)

What is the fundamental willingness and ability to buy a product. You have to have both

Demand

When you Look at a Demand OR Supply Schedule T-Table, what is different than when when you look at a Math T-Table?

Demand T-Table P/Q is not graphed X/Y like Math.

P= Vertical

What curve goes from the Upper Left to Lower Right on a Graph?

Demand Curve

Price Up = Quantity Down OR Price Down = Quantity up is what Economic Law?

Law of Demand

In Demand, Price & Quantity move opposite directions. That's why the graph has a negative slope, what is the "Mathematical" word for describing this relationship?

Inverse Relationship

What means that people get less satisfaction/utility out of products the more and more we have. So we are less willing to buy it, unless the price is lower and lower.

Diminishing Marginal Utility

If you had a WHOLE PIZZA and were hungry. The first piece would be very valuable (super high utility), the next piece would be valuable (high utility) But by the 5th piece you might be "Bleh" (low utility) and full. By the 8th piece you might even be "Sick" (negative utility). What term is this an example of?

Example of Diminishing Marginal Utility

When you shift the WHOLE Demand Curves moves. What way is MORE Demand?

Shifting Demand Curves

More = Right

Left = Less

If the line is Shaking on Demand Curve (Really because Supply is Shifting). When Price goes up, does the Equilibrium Point move to the Lower Right or Upper Left on the Demand Curve

Price Up = Demand Shakes to Upper Left

Price Down = Demand Shakes to Lower Right

Say the Shift or Shake Rhyme

If a problem mentions PRICE

And same product TWICE

It SHAKES like scared little MICE

Name at least 3 of the 5 Demand Determinents

5 Factors that Shift Demand Curves:

1) Consume Income

2) Consumer Tastes / Preferences

3) Substitutes

4) Compliments

5) Expectations

If your income goes up, but you buy LESS of that good. What would be the term for good?

Inferior good

If your income goes up, and you buy more of that good. What would be the term for good?

Normal Good

When Consumer Tastes change, +something becomes more popular, demand for that product shifts what way?

Shift Right (More Popular = More Demand = Shift Right)

Burger King & McDonalds, Coke & Pepsi, are examples of what term?

Substitutes

Products that replace each other are called what?

Substitutes

If Prices at Mcdonalds goes up....

What happens to business at Burger King

*Can reverse all of this*

Shift Demand of BK Right (More Demand)

Peanut Butter and Jelly Milk and Cereal would be examples of what term?

Compliments

Products that go together are what term?

Compliments

If Milk suddenly triples to about $10 a gallon, what would happen to Cereal Businesses?

*Can reverse all of this*

Shift Demand of Cereal Left (Less Demand)

What is the ONLY factor that can change both Demand and Supply

Expectations

Explain how Expectation of Christmas effects both Supply and Demand for Toys

Christmas

Expectation --> More Demand for Toys

Expectation --> More Supply of Toys

fundamental willingness and ability to produce AND sell a product. You have to have both for it to be a Supply.

Supply

What curve goes from the Lower Left to Upper Right on a Graph?

Supply Curve/Graph

Price Up = Quantity UP OR Price Down = Quantity Down is what Economic Law?

Law of Supply

In Supply, Price & Quantity move same direction. That's why the graph has a positive slope, what is the "Mathematical" word for describing this relationship?

Direct Relationship

When you shift the WHOLE Supply Curves moves. What way is MORE Supply?

What way is LESS supply

Shifting Supply Curves

Right is MORE

Left is LESS

(Especially important to not think up/down here or your wrong!)

If the line is Shaking on Supply Curve (Really because Demand is Shifting). When Price goes up, does the Equilibrium Point move to the Lower Left or Upper Right on the Supply Curve

Shaking Supply Curves

Price Up = Equilibrium Shakes to Upper Right

Price Down = Equilibrium Shakes to Lower Left

Name 4 of 7 Determinents/Factors that can shift Supply

Supply Determinants

1) Cost of Resources

2) Productivity

3) Producing Technology

4) Govt Taxes or Subsidy

5) Expectations

6) Gov't Regulations

7) Number of Sellers

If the cost of resource (say wages you pay someone, or steel used in cars) increases

What way does the Supply Curve Shifts

Cost of Resource Problem

Supply Shifts Less (Because you can afford to make less)

If something makes your business more productive (say an assembly line or more motivated employees) What way does the supply curve shifts?

Productivity Problem

Supply Shifts Right

If some new technology your business more productive (say computers) the supply curve shifts What way?

Producing Technology Problem

Supply Shifts Right

Taxes are paid by a company. So if taxes go up, then Supply Curve Shifts what way?

Government Taxes Problem

Taxes Up = Supply Shifts Less (Because they can't afford to make as many)

What do we call the OPPOSITE of a Tax when the Government GIVES taxpayer money to a business

Subsidy

If a government STOPS giving a subsidy to US Farmers to help them grow, what way does the Supply Curve Shift

*Can reverse if you remove/lower subsidy*

Subsidy Problem

Lower Subsidy = Supply Shifts Less

(If the Gov't stops helping them they can afford to make less)

What is the term for the Legal Limit Govt puts on production?

Quota

If the Gov't puts a NEW or LOWER a quota on foreign cars, what happens to the Supply Curve of Cars?

*Can reverse by removing a quota*

Government Regulation Problem

Supply Shifts Left

(Less Cars can come to our country)

If more business enter that market that increases supply so the Supply Curve shfits RIGHT

*can reverse when companies close*

Number of Sellers

If you graph Supply Curve and Demand Curve on the same graph, What is point is where they cross. It occurs naturally

Equilibrium Point

It is a natural compromise between

Sellers trying to sell HIGH

Buyers trying to buy CHEAP

Equilibrium Price

What is the Number of Sellers Called?

QS or Quantity Supplied

What is the Number of Buyers Called?

QD or Quantity Demanded

What is QS > QD called?

Surplus

What happens at prices above equilibrium (Too High/Hot) and causes prices to go back down toward equilibrium

Surplus

What is QD > QS called?

Shortage

What is it called when products are running out, making things rare. It happens at prices below equilibrium and causes prices to go back up

Shortage

What is it called when you set a minimum price by LAW rather than by Supply/Demand.

Ex: Minimum Wage

Price Floor

What is it called when you set a maximum price by LAW rather than by Supply/Demand

Price Ceiling

What are the 2 Basic Forces that can cause

Price to Increase

When Demand Shifts Right (Increase)

or

when Supply Shifts LEFT (Decrease)

What are the 2 Basic Forces that can cause

Price to Decrease

When Demand Shifts LEFT (Decrease)or

or

when Supply Shifts Right (Increase)

Supply and Demand control the Price of Everything. When does that impact you?

When you shop (buy) and when you work (sell)

What would have to change to cause

Price to Increase

Quantity to Increase

More Demand

What would have to change to cause

Price to Decrease

Quantity to Increase

More Supply

What would have to change to cause

Price to Increase

Quantity to Decrease

Less Supply

What would have to change to cause

Price to decrease

Quantity to decrease

Less Demand

What TWO changes would have to happen to cause

Price to Decrease

And a Fight (Anything) over Quantity

Less Demand & More Supply

Both cause prices down

Less D = Q down & More Supply = Q up so fight over Q

What TWO changes would have to happen to cause

A Fight over Price

And Quantity to Increase

More Demand & More Supply

More D = More Buyers drives up prices & More Supply = Q drives down prices so they fight over Price

More D & More S means more Buyers & More Seller so Q Increases

What TWO changes would have to happen to cause

Price to Increase

And a Fight (Anything) over Quantity

More Demand & Less Supply

Both cause prices up

More D = More Buyers/Qd up & Less Supply = Q down so fight over Q

What TWO changes would have to happen to cause

A Fight over Price

And Quantity to decrease

Less Demand & Less Supply

Less D = Less Buyers drives down prices & Less Supply = Q drives up prices so they fight over Price

Less D & Less S means Less Buyers & Seller so Q Decreases

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