mid term 2 d

Market

a group of buyers and sellers of a particular good or service.

Competitve Market

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price.

Quantity Demanded

the amount of a good that buyers are willing and able to purchase.

Law Of Demand

the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises.

Demand Schedule

a table that shows the relationship between the price of a good and the quantity demanded.

Demand Curve

a graph of the relationship between the price of a good and the quantitiy demanded.

Normal Good

a good for which, other things equal, an increase in income leads to an increas in demand.

Inferior Good

a good for which, other things equal, an increase in income leads to a decrease in demand.

Substitutes

two goods for which an increase in the price of one leads to an increase in the demand for the other.

Complements

two goods for which an increase in the price of one leads to a decrease in the demand for the other.

Quantity Supplied

the amount of a good that sellers are willing and able to sell.

Law Of Supply

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises.

Supply Schedule

a table that shows the relationship between the 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.

Equalibrium

a situation in which the price has reached th level where quantity supplied equals quantity demanded.

Equalibrium Price

the price that balances quantity supplied and quantity demanded.

Equalibrium Quantity

the quantity supplied and the quantity demanded at the equalibrium price.

Surplus

a situation in which quantity supplied a greater tahn quantity demanded.

Shortage

a situation in which quantity demanded is greater than quantity supplied.

Law Of Supply and Demand

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.

Summary

-Economists use the model of supply and demand to analyze competitve markets.
-In a competative market, there are many buyers and sellers, each of whom has little or no influence on the market price.

-The demand curve shows how the quantity of a good demanded depends on price.
- According to the law of demand, as the price of a good falls, the quantity demanded rises.
- Therefore, the demand curve slopes downward.

-In addition to price, other than determinants of how much consumers want to buy include income, th prices of substitutes and compliments, tates, expectations, and the number of buyers.
- If one of these factors changes, the demand curve shifts.

-The supply curve shows how the quantity of a good supplied depends on the price.
- According to the law of supply, as the price of a good rises, the quantity supplied rises.
- Therefore, the supply curve slopes upwards.

-In addition to price, other determinats of how much producers want to sell include input prices, technology, expectations, and teh number of sellers.
- If one of these factors changes the supply curve shifts.

-The intersection of the supply and demand curves determines the market equalibrium.
- At the equalibrium price, the quantity demanded equals the quantity supplied.

- The behaviors of buyers and sellers naturally drives markets towards their equalibrium.
- When the market price is above the equalibrium price, there is a surplus of the good, which causes the market price to fall.
- When the market price is below the equalibrium price, there is a shortage, which causes the market price to rise.

- To analyze how any event influences a market, we use the supply-and-demand diagram to examine how the event affects the equalibrium price and quantity.
- To do this we follow three steps.
- First, we decide whetther the event shifts the supply curve or the demand curve (or both).
- Second, we decide which direction the curve shifts.
- Third, we compare the new equilibrium with the initial equilibrium.

- In market economies, prices are the signals that guide economic decisions and thereby allocate scarce resources.
- For every good in the economy teh price ensures that supply and demand are in balance.
- The equalibrium price then determines how much of the good buyers choose to purchase and how much sellers choose to produce.

What is a competative market?
Breifly describe the types of markets other than perfectly competitive markets.

- a market w/ many buyers and sellers
-each buyer and seller had a negligable effecto on the market.
-Monopoly: only one seller, the seller sets the price.

What determines the quantity of a good that buyers demand?

- price of the good

What are the demand schedule and the demand curve, and how are they related? Why does the demand curve slope downwards?

- demand schedule is a table that that shows the relatonship between the price of a good and the quantity demanded.
- demand curve is the graphical relationship between the price of a good and the quantity demanded.
- lower prices increases the quantity demanded.

Does a change in consumers' tastes lead to a movement along the demand curve or a shift in the demand curve?
Does a change in price lead to a movement along the demand curve or a shift in the demand curve?

- a shift.
- a movement.

Popeye's incomes declines and, as a result, he buys more spinach. Is spinach an inferior good or a normal good?
What happens to popeye's demand curve for spinach?

- inferior good
- it moved downwards.

What determines the quantity of a good that sellers supply?

- the amount of a good that sellers are willing and able to sell.

What are the supply schedule and the supply cruve, and how are they related?
Why does the supply curve slope upwards?

- supply curve: a graph of the relationship between the price of a good and the quantity supplied.
- supply schedule: a table that shows the relationship between the price of a good and the quantity supplied.
-because a higher price increases the quantity supplied, the supply curve slopes upward.

Does a change in the producers' technology lead to a movement along the supply curve or a shift in the supply curve?
Does a change in price lead to a movement along the supply curve or a shift in the supply curve?

-shift
-movement

Define the equalibrium of a market. Describe the forces that move a market towards its equalibrium?

a situation in which the price has reached the level where quantity supplied equals quantity demanded.
- equalibrium price: the price that balanaces quantity supplied and quantity demanded.
- equalibrium quantity: the quantity supplied and the quantity demanded at the equalibrium price.

Beer and pizza are complements because they are often enjoyed together. When the price of beer rises, what happens to the supply, demand, quantity supplied, quantity demanded, and the price in the market for pizza?

-supply: supply increases.
-demand: demand increases.
-quantity supplied: increases
-quantity demanded: increases
-price: increases.

Describe the role of prices in market economies.

price influences the market economy by judging th equalibrium.