Unit 2 - Supply and Demand Guide
2.0(10)Studied by 944 people
0%Unit 2: Supply and Demand Mastery
0%Exam Mastery
View linked noteBuild your Mastery score
Multiple Choice
Call KaiSupplemental Materials
Card Sorting
1/57
Last updated 10:32 AM on 4/14/23
Name | Mastery | Learn | Test | Matching | Spaced | Call with Kai |
|---|
No analytics yet
Send a link to your students to track their progress
58 Terms
1
New cards
PES
measures how sensitive are sellers to price changes on goods.
2
New cards
Substitution effect
as the price of a good increases, consumers substitute the good with another that is cheaper.
3
New cards
License
gives an owner the right to supply a good /service.
4
New cards
Deadweight loss
transactions that should occur, but dont because of government intervention (calculate the area= triangle formula, œ (base x height)
5
New cards
Quota
upper limit of a quantity that can be bought or sold (known as quantity control)
6
New cards
Subsidies
are the opposite of taxes and help reduce price per unit.
7
New cards
Inferior good
increase in demand when consumers income decreases
8
New cards
Equilibrium
occurs when no one is better off doing something else.
9
New cards
Substitutes
good /service that can be used in place of another, when price of one increases, consumers will buy more of the other (ex.
10
New cards
Complements
goods /services that are consumed together (ex.
11
New cards
inverse impact
The cost of production (land, labor, capital) has a(n) ________ on the supply.
12
New cards
large portion
Flat, quantity is sensitive to price change, substitutes, luxury items, ________ of income, not needed immediately.
13
New cards
Elasticity
how much the Q is affected by P.
14
New cards
Tariffs
tax placed on a good that is imported or exported.
15
New cards
Quota rent
difference between demand price and supply price.
16
New cards
Negative
= compliments (inferior good)
17
New cards
positive
= substitutes (normal good)
18
New cards
Shortage
Qs
19
New cards
Double shift
either price or quantity will be unknown.
20
New cards
Taxes
are added up to the unit cost of production, thus making it more expensive.
21
New cards
Elastic demand
means that the goods are subject to be affected by a change in price.
22
New cards
Inelastic demand
TR correlates direct with price.
23
New cards
Normal good
increase in demand when consumers income increases (ex.
24
New cards
market supply
The ________ shows the quantity a supplier is willing and able to offer at various prices at a given time.
25
New cards
Elastic demand
TR correlates inversely with price.
26
New cards
Inelastic demand
means that goods are not subject to be affected by a change in price.
27
New cards
Demand
the quantity which a consumer/buyer are willing and able to buy at different prices
28
New cards
Law of Demand
As price increases, demand decreases, and as price decreases, demand increases
29
New cards
Substitutes
good/service that can be used in place of another, when price of one increases, consumers will buy more of the other (ex
30
New cards
Substitution effect
as the price of a good increases, consumers substitute the good with another that is cheaper
31
New cards
Complements
goods/services that are consumed together (ex
32
New cards
Income effect
as income increases, people will buy more of normal goods, and less of inferior goods
33
New cards
Normal good
increase in demand when consumers income increases (ex
34
New cards
Inferior good
increase in demand when consumers income decreases (ex
35
New cards
Diminishing marginal utility
As more units of a product are consumed, the satisfaction/utility it provides tends to decline
36
New cards
Supply
different quantities of goods/services which sellers are willing and able to produce at a given price
37
New cards
Law of supply
as price increases, quantity supplied also increases, this is a direct relation
38
New cards
Inelastic demand
TR correlates direct with price
39
New cards
Elasticity
how much the Q is affected by P
40
New cards
PES
measures how sensitive are sellers to price changes on goods
41
New cards
Inelastic
 unable to respond to price change
42
New cards
Equilibrium
occurs when no one is better off doing something else
43
New cards
Producer surplus
actual price -price the producer is willing to sell for
44
New cards
Demand increase
price and quantity increase
45
New cards
Demand decrease
price and quantity decrease
46
New cards
Supply increase
price decreases, quantity increases
47
New cards
Supply decrease
 price increases, quantity decreases
48
New cards
Double shift
either price or quantity will be unknown
49
New cards
Deadweight loss (DWL)
transactions that should occur, but dont because of government intervention (calculate the area = triangle formula, œ(base x height)
50
New cards
Price floor
minimum price a supplier can charge, price is set above equilibrium (causes shortage)
51
New cards
Price ceiling
maximum price a supplier can charge, price is set below equilibrium (causes surplus)
52
New cards
Quota
upper limit of a quantity that can be bought or sold (known as quantity control)
53
New cards
License
gives an owner the right to supply a good/service
54
New cards
Demand price
the price at which consumers will demand that quantity
55
New cards
Supply price
the price at which producers will supply that quantity
56
New cards
Quota rent
difference between demand price and supply price
57
New cards
Tariffs
tax placed on a good that is imported or exported
58
New cards
Import quota
restriction on the quantity of a good that can be imported
