Economics Chapter 3 Flashcards

Study Notes

Economic Terms and Definitions

Ceteris Paribus: Latin term meaning "all else equal," used in economic analysis to isolate the effects of one variable while holding others constant.
Demand Curve Shift: Transition from point A to point B on a demand curve due to various factors, including changes in consumer preferences, income, or prices of related goods.
Demand Schedule: A structured table illustrating the relationship between product price and the quantity demanded by consumers at various price points.
Quantity Demanded: The specific amount of a good or service that consumers are willing and able to purchase at a set price.
Demand Curve: A graphical representation of the relationship between the price of a product and the total quantity demanded, typically downward sloping.
Market Demand: The total demand for a good or service aggregating the preferences of all consumers within a market.
Law of Demand: Economic principle stating that, with everything else held constant, when product prices decrease, the quantity demanded increases, and vice versa.
Normal Goods: Products for which demand rises with an increase in consumer income and falls when income decreases.
Inferior Goods: Products whose demand increases when consumer income decreases and declines when income rises.
Perfect Competition: Market structure characterized by numerous buyers and sellers, identical products sold by all firms, and no entry barriers for new competitors.
Substitute Goods: Goods or services that fulfill similar needs or purposes, allowing consumers to switch from one to another based on price changes.
Complements: Products or services that are consumed together, where the consumption of one enhances the use of the other.

Supply Concepts

Law of Supply: Economic rule indicating that, all else being constant, an increase in the price of a product leads to an increase in the quantity supplied, while a decrease in price results in a decreased quantity supplied.
Supply Schedule: A table that demonstrates the relationship between the price of a product and the quantity supplied across different price levels.
Quantity Supplied: The specific amount of a good or service that a supplier is willing and able to offer at a certain price.
Supply Curve: A graphical illustration depicting the relationship between the price of a product and the quantity supplied, typically upward sloping.

Market Dynamics

Market Equilibrium: A state where the quantity demanded by consumers matches the quantity supplied by producers, resulting in a balanced market.
Impact of Supply Increase: An increase in supply typically results in a decrease in equilibrium price; however, price changes influence quantity demanded, not the demand curve itself.

Description

Test your knowledge with these flashcards covering key concepts from Chapter 3 of your economics course. Each card features a term and its definition, helping you grasp essential economic principles such as ceteris paribus and the demand curve. Perfect for review and preparation for exams.