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What are the 5 things that shift the demand curve?
Income, Price of Related Goods, Expectations, Taste, Number of Buyers
Income, Price of Related Goods, Expectations, Taste, Number of Buyers shift which curve?
Demand
Income shifts which curve?
Demand
Taste shifts which curve?
Demand
Number of Buyers shifts which curve?
Demand
Expectations shifts which curve?
Demand and Supply
Price of Related Goods shifts which curve?
Demand and Supply
What causes the supply curve to shift?
Input Prices, Technology, Expectations, Number of Sellers, Price of Related Goods
Input Prices, Technology, Expectations, Number of Sellers, Price of Related Goods shifts which curve?
Supply
Input Prices shifts which curve?
Supply
Technology shifts which curve?
Supply
Number of Sellers shifts which curve?
Supply
What happens to Price and Quantity when demand increases?
Higher price and Higher quantity
When price and quantity both go up, which curve has shifted?
Demand shifts to the right
When price and quantity both go down, which curve has shifted?
Demand shifts to the left
What happens to price and quantity when demand decreases?
Price and quantity both decrease
What happens to price and quantity when supply increases?
Price decreases and quantity increases
When price decreases and quantity increases which curve shifts?
Supply shifts to the right
What happens to price and quantity when supply decreases?
Price increases and quantity decreases
When price increases and quantity decreases which curve shifts?
Supply shifts to the left
What happens to price and quantity when both supply and demand increase?
Price is indeterminate and quantity increases
When quantity increases but price is indeterminate, what shifts happen?
Supply and Demand both shift to the right
What happens to price and quantity when both supply and demand decrease?
Price is indeterminate and quantity decreases
When quantity decreases and price is indeterminate what shifts happen?
Both supply and demand shift to the left
What happens to price and quantity when supply increases and demand decreases
Price decreases and quantity is indeterminate
When price decreases and quantity is indeterminate what shifts have happened?
Supply has shifted right and demand has shifted left
What happens to price and quantity when supply decreases and demand increases?
Price increases and quantity is indeterminate
When price increases and quantity is indeterminate, what shifts happened?
Supply shifts left and demand shifts right
When there is greater quantity supply in a market than quantity demand what occurs?
A surplus
What conditions create a surplus in a market?
When quantity supplied is greater than quantity demanded
How does a market resolve a surplus?
Price is decreased until equilibrium is established
When there is greater quantity demand than quantity supplied what occurs?
A shortage
What conditions create a shortage in a market?
When quantity demanded is greater than quantity supplied?
How does a market resolve a shortage?
Price is increased until equilibrium is established
What is a price ceiling?
A legal maximum on the price at which a good can be sold
A legal maximum price at which a good can be sold is a?
Price Ceiling
What is a price floor?
A legal minimum on the price at which a good can be sold
A legal minimum on the price at which a good can be sold is a?
Price Floor
What makes a price control binding?
When a price floor is above equilibrium price or a price ceiling is below equilibrium price
When a price floor is above equilibrium price or a price ceiling is below equilibrium price what is this known as?
Binding Price Control
What problems are created by binding price controls?
They create either surpluses or shortages in a market that cannot be resolved through a change in price
Why do governments put price controls in place?
They feel a market price is unfair
What is a subsidy?
A government payment that supports a business or market
A government payment that supports a business or market is a?
Subsidy
What is an Excise Tax?
a tax on the production or sale of a good
a tax on the production or sale of a good is a?
Excise Tax
When an excise tax is put in place, what is the price sellers receive?
Find the new equilibrium on the graph, then drop straight down till you hit the original supply curve. Go to the y axis and you will find the price the seller receives
How do you find the size of a tax on a graph?
The difference between the original curve and the new curve with the tax will be the size of the tax
How do you find tax revenue when an excise tax is put in place?
Find the size of the tax and multiply by the quantity sold at the new equilibrium
What is deadweight loss?
the loss in total surplus that occurs whenever an action or a policy reduces the quantity transacted below the efficient market equilibrium quantity
Where is Deadweight Loss found on a graph with an excise tax?
The triangle created where supply and demand come together originally, and the vertical line between the new equilibrium and the original supply curve
What is tax incidence?
the manner in which the burden of a tax is shared among participants in a market
The manner in which the burden of a tax is shared among participants in a market is?
Tax Incidence
How do you find the tax incidence paid by buyers?
The box that is created by the new equilibrium price and the original price in the market
How do you find the tax incidence paid by sellers?
The box that is created between the original price and the new price that the seller receives
What determines who pays the bigger burden of tax incidence
Whoever is more inelastic will pay the bigger portion of the tax
Why does inelasticity explain who pays the bigger burden of a tax?
If you are inelastic, then you will buy or produce the good no matter what. Whereas if you are elastic, you are price sensitive. If the buyer is price sensitive and the producer is inelastic, the producer will lose lots of sales by raising prices, so they absorb the majority of the tax.
What is the world price?
the price of a good that prevails in the world market for that good
the price of a good that prevails in the world market for that good is?
The world price
When the world price is above domestic price?
The country exports the good
A country is an exporter if?
The world price is above domestic price
When the world price is below the domestic price?
The country imports the product
A country is an importer if?
The world price is below the domestic price
What is a tariff
A tax on imported goods
Why would a government put in place a tariff?
They are trying to protect domestic industries against cheaper foreign imports
Who is hurt by a tariff?
Consumers pay higher prices because of a tariff
What does the world price look like on a graph?
A horizontal line at the world price
How do we figure out how many imports come into a country through a graph?
Where the world price hits the supply curve this establishes domestic supply. Where the world price hits the demand curve this is domestic demand. The difference between domestic demand and supply is made up by imports
What does a tariff look like on a graph?
It is a horizontal line above the world price
Where is tax revenue found on a tariff graph?
Find the quantity supplied and quantity demanded where the tariff price hits the supply and demand curves. This is the amount of imports into the country. Then find the difference between the world price and the tariff price
Where is DWL found on a tariff graph?
The triangles on both sides of the tax revenue
What happens to consumer surplus when a tariff is put in place?
Consumer surplus shrinks
What happens to producer surplus when a tariff is put in place?
Producer surplus increases
What is a quota?
A limit on the number of goods that can be imported
A limit on the number of goods that can be imported is?
A quota
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