Economics Exam Review Flashcards

These flashcards cover fundamental concepts from the economics lecture notes, including market equilibrium, determinants of demand, and elasticity.

Market Equilibrium

The point at which supply and demand are equal, leading to an efficient allocation of resources.

Supply Shift

When the supply curve moves to the right or left, indicating a change in the quantity supplied at every price.

Determinants of Demand

Factors that can cause the demand curve to shift, including consumer income, preferences, and prices of related goods.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to changes in price or income.

Normal Goods

Goods for which demand increases as consumer income rises, leading to a positive income elasticity.

Inferior Goods

Goods for which demand decreases as consumer income rises, leading to a negative income elasticity.

Price Ceiling

A maximum price set by the government that can be charged for a good, leading to potential shortages if binding.

Binding Price Ceiling

A price ceiling that is set below the market equilibrium price, resulting in a shortage.

Perfectly Elastic Supply

A situation where supply is infinitely responsive to price changes, leading to a horizontal supply curve.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between what producers are willing to sell a good for and the price they actually receive.