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What does the law of supply state?
What does the law of supply state?
Other things remaining the same, the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied.
What can a supply curve be interpreted as?
What can a supply curve be interpreted as?
A minimum-supply-price curve.
What is marginal cost?
What is marginal cost?
The lowest price at which someone is willing to sell, shown in a supply curve.
A rise in the price of a cellphone ______ the quantity supplied and ______ supply.
A rise in the price of a cellphone ______ the quantity supplied and ______ supply.
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What are substitutes in production?
What are substitutes in production?
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What happens at the equilibrium price?
What happens at the equilibrium price?
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What is the formula for the equilibrium quantity?
What is the formula for the equilibrium quantity?
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What is the formula for the equilibrium price?
What is the formula for the equilibrium price?
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What defines a competitive market?
What defines a competitive market?
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What is the money price?
What is the money price?
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What is relative price?
What is relative price?
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What is quantity demanded?
What is quantity demanded?
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What does the law of demand state?
What does the law of demand state?
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What is demand?
What is demand?
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What does the demand curve show?
What does the demand curve show?
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What is a change in the quantity demanded?
What is a change in the quantity demanded?
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What is a change in demand?
What is a change in demand?
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What effect does a rise in the price of a related good (substitute) have on demand?
What effect does a rise in the price of a related good (substitute) have on demand?
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What is a complement?
What is a complement?
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What effect do expected future prices have on current demand?
What effect do expected future prices have on current demand?
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How does income affect demand for a normal good?
How does income affect demand for a normal good?
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How does income affect demand for an inferior good?
How does income affect demand for an inferior good?
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Study Notes
Law of Supply
- Indicates that with all else held constant, higher prices result in greater quantities supplied.
- Conversely, lower prices lead to smaller quantities supplied.
Supply Curve
- Represents the minimum-supply-price curve, indicating the lowest price a seller is willing to accept.
Marginal Cost
- Relates to the minimum price at which a seller is willing to sell, depicted in the supply curve.
Price Impact on Supply
- An increase in cellphone prices results in a higher quantity supplied but does not alter overall market supply.
Substitutes in Production
- Refers to goods that can be produced using the same resources, allowing firms flexibility in production choices.
Equilibrium Price Dynamics
- At equilibrium price, buyers will pay the maximum they are willing for the last unit, while sellers will receive the minimum they will accept.
Equilibrium Quantity Formula
- Calculated using the formula (a−c)/(b + d).
Equilibrium Price Formula
- Determined by the formula (ad + bc)/(b + d).
Competitive Market Definition
- Characterized by numerous buyers and sellers, ensuring that no single entity can influence the market price.
Money Price
- Refers to the monetary amount that must be exchanged for a good.
Relative Price
- Defined as the ratio of one money price to another, reflecting the trade-offs between different goods.
Quantity Demanded
- Represents the total amount consumers intend to purchase over a specified timeframe at a particular price.
Law of Demand
- States that, all else being equal, higher prices lead to a lower quantity demanded, whereas lower prices encourage higher quantities demanded.
Demand Relationship
- Establishes the connection between the price of a good and the quantity demanded.
Demand Curve
- Visually represents the relationship between quantity demanded and price, holding all other factors constant.
Changes in Demand
- Change in Quantity Demanded: Movement along the demand curve, triggered by price changes.
- Change in Demand: A shift in the demand curve due to factors other than price.
Substitute Goods
- An increase in the price of a substitute good elevates demand for the primary good, shifting the demand curve to the right.
Complement Goods
- An increase in the price of a complementary good decreases demand for the related good, shifting the demand curve to the left.
Expected Future Prices
- Anticipation of higher future prices can lead to increased current demand, shifting the demand curve to the right.
Income Impact on Demand
- For normal goods: An increase in income raises demand, shifting the curve rightward.
- For inferior goods: An income increase causes a decrease in demand, shifting the curve leftward.
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Description
Test your understanding of key concepts in Microeconomics Chapter 3 with these flashcards. Focus on the law of supply, supply curves, and other important definitions. Ideal for students looking to reinforce their economic knowledge.
