All Flashcards
What is 'Demand'?
Consumers' desire and ability to purchase goods/services.
What is 'Supply'?
Producers' willingness and ability to offer goods/services.
What is 'Equilibrium'?
The point where supply and demand intersect, determining market price and quantity.
Define 'Substitutes'.
Goods used in place of each other.
Define 'Complements'.
Goods used together.
What are 'Normal Goods'?
Goods for which demand increases as income rises.
What are 'Inferior Goods'?
Goods for which demand decreases as income rises.
Define 'Taxes' in economics.
Government levies that decrease supply when increased.
Define 'Subsidies' in economics.
Government support that increases supply when increased.
Define 'Equilibrium Price'.
The market price where the quantity supplied equals the quantity demanded.
Differentiate substitutes and complements.
Substitutes are used in place of each other; complements are used together.
What is the difference between normal and inferior goods?
Demand for normal goods increases with income; demand for inferior goods decreases with income.
Distinguish between movement along and a shift of the demand curve.
Movement along the curve is caused by price changes; a shift is caused by TBPIE factors.
Distinguish between movement along and a shift of the supply curve.
Movement along the curve is caused by price changes; a shift is caused by TPRENT factors.
What is the impact of taxes on supply?
Higher taxes decrease supply.
What is the impact of subsidies on supply?
Higher subsidies increase supply.
How does a tax on gasoline affect the gasoline market?
A tax on gasoline will decrease the supply of gasoline, leading to a higher equilibrium price and lower equilibrium quantity.
How does a subsidy for electric cars affect the gasoline market?
A subsidy for electric cars will decrease the demand for gasoline, leading to a lower equilibrium price and lower equilibrium quantity.