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Get faster at matching terms Terms in this set (55)Market: A group of buyers and sellers of a particular good or service. Competitive Market: Market with many buyers and many sellers. Characteristics of a perfectly competitive market 1) Same good (cannot tell the difference between sellers) Why are buyers and sellers "price takers"? They must accept the market price as given. Non perfect competitive markets: 1) Monopoly Monopoly: A market with only one seller (electricity) Oligopoly: A market with only few sellers ( car manufacturers) Monopolistic Competition: a market with a large number of sellers ( toothpaste manufacturers) Quantity Demanded: The amount of a good that buyers are willing and able to purchase. Law of Demand: other things equal, the quantity demanded of a good falls when the price of the good rises. Demand Schedule: A table with price of a good and the quantity demanded. Demand Curve: A graph of the relationship between the price of a good and the quantity demanded. Market Demand: the sum of all all of the individual demands. Any factors other than price change- demand curve shifts An increase in demand- shift to the right Normal Good: An increase in income-- increase in demand Inferior Good: an increase in income---- decrease in demand Substitutes: Increase in the price of one good-- increase in the demand for the other good Complements: Increase in the price of one good -- decrease in the demand for the other good Tastes: ex. General Surgeon Recommendations... cigarettes and cancer Expectations: Future Income: ex. higher future income increase current demand Future Prices: ex. higher future prices increase current demand Number of buyers: more buyers-- higher demand T/F: If the demand for a good falls when income falls, the good is called an inferior good. False T/F: When an increase in the price of one good lowers the demand for another good, the two goods are called complements. True T/F: Baseballs and baseball bats are substitute goods. True T/F: An increase in the price of pizza will shift the demand curve for pizza to the left. True demand down = shift to left T/F: Whenever a determinant of demand other than price changes, the demand curve shifts. True T/F: A reduction in the price of a product and an increase in the number of buyers in the market affect the demand curve in the same general way. ... The Supply Curve: The relationship between price and quantity supplied Quantity Supplied: the amount of a good that sellers are willing and able to sell. -always positively related to price. Law of Supply: other things equal, the quantity supplied of a good rises when the price of the good rises Supply Schedule: a table with price of a good and the quantity supplied Supply Curve: a graph of the relationship between the price of a good and the quantity supplied change in quantity supplied- movement along the supply curve T/F: The quantity supplied of a good or service is the amount that sellers are willing and able to sell at a particular price. True T/F: The law of supply states that other things equal , when the price of a good rises, the quantity supplied of the good falls. False When any factors other than price change, the supply curve will shift. increase in supply-- shift of the supply curve to the right Input prices: higher, the supply decreases ( higher cost) Technology: Higher productivity, supply increases(lower cost) Expectations: higher future prices--- lower supply Number of sellers more sellers--- higher supply T/F: If a company making frozen orange juice expects the price of their product to be higher next month, they will supply more to the market this month. False T/F: A supply curve slopes upward because, all else equal, a higher price mean a greater quantity supplied. True T/F: a movement along the supply curve is called a change in supply while a shift of the curve is called a change in quantity supplied. False T/F: If there is an improvement in the technology of producing a product. the supply curve for the product will shift to the left. False The supply will increase and therefore shift to the left. T/F: a reduction on an input price will cause a change in the quantity supplied, but not a change in supply. False Market's Equilibrium: the point where the supply and demand curves intersect Equilibrium: when at certain price quantity supplied equals quantity demanded. Equilibrium price: the price that balances quantity supplied and quantity demanded Equilibrium quantity: the quantity supplied and the quantity demanded at the equilibrium price. Surplus: -quantity supplied is greater than quantity demanded to lower surplus: producers lower the price (sales) Shortage: -quantity demanded is greater than quantity supplied -sellers raise the price until the market reaches equilibrium Law of supply and demand: the price adjusts to bring the supply and demand into balance (equilibrium) T/F: Quantity demanded is equal to quantity supplied, at the equilibrium price True T/F: Surpluses drive up the price while shortages drive down price: False T/F: A shortage will occur at any price below the equilibrium price and a surplus will occur at any price above the equilibrium price. True Three Steps to Analyze Changes in the Equilibrium -event shifts supply or demand(or maybe both) Recommended textbook solutions Principles of Microeconomics7th EditionN. Gregory Mankiw 830 solutions Principles of Economics 2e2nd EditionDavid Shapiro, Steven Greenlaw, Timoth Taylor Essentials of Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 663 solutions Essential Foundations of Economics7th EditionHenry Cheeseman 232 solutions Sets with similar termsmicroeconomics chapter 460 terms kkowski Chapter 447 terms katherinejeckovich Econ1 Chapter 4 Terms42 terms marcelasosa Chapter 4: Market forces of Supply and Demand35 terms nolan_m_klein Sets found in the same folderMicro Economics Chapters 10, 11, 1462 terms Seminoles2448 Chapter 440 terms kristina_evanko micro ch 1725 terms Shen2012 ABE-204 Ch 558 terms jessi_neary Other sets by this creatorMicroeconomics Exam 1 Chapter 422 terms rhowlett9 Microeconomics Exam 129 terms rhowlett9 Verified questions
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QUESTION The poverty threshold is not adjusted to reflect changes in the standard of living. As a result, is the poverty threshold a relative or an absolute measure of poverty? That is, does it define poverty according to how poor someone is relative to others or according to some fixed measure that doesn't change over time? Explain Verified answer Other Quizlet setsPR TEST 140 terms mcb0128 Chapter 6 Test (Questions from Test)11 terms Oliviyah_Thornton Ch. 8 Micro131 terms K__Dickerson Related questionsQUESTION why would all lactose fermenters be ignored on the plates 2 answers QUESTION Determining the Price for a Monopolistically Competitive Firm: 3 answers QUESTION With most light microscopes, what is the total magnification if using the objective lens that is closest to the specimen along with the ocular lens? 2 answers QUESTION Reliance on indicators of productivity such as education, experience, and test scores may keep some very good people from getting a job and may result in hiring unproductive people. This is called: 2 answers When an increase in the price of one good lowers the demand for another good the two goods are called complements a true b false?When an increase in the price of one good lowers the demand for another good, the two goods are called compliments. True.
What if two goods are complements?If two goods are complements, this means that a rise in the price of one commodity will induce a downward shift in demand for the other commodity. The prices of complementary or substitute goods also shift the demand curve.
What happens when a price increases for complementary good?Complementary goods will have a negative cross elasticity of demand. If the price of one good increases, demand for both complementary goods will fall.
What are complementary and supplementary goods?Supplementary Goods or Complementary Goods are goods that are used together. E.g. shoes and socks, knife and cutting board,… Remember, complementary sounds like complete, so in a sense, the products will complete each other (it would make more sense if they go together).
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When an increase in the price of one good lowers the demand for another good the two goods are called complementary?
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