All Flashcards
What are the differences between a change in quantity demanded and a change in demand?
A change in quantity demanded is a movement along the demand curve due to a change in price, while a change in demand is a shift of the entire curve due to factors other than price.
What are the differences between a change in quantity supplied and a change in supply?
A change in quantity supplied is a movement along the supply curve due to a change in price, while a change in supply is a shift of the entire curve due to factors other than price.
What are the key differences between price floors and price ceilings?
Price floors are minimum prices set above the equilibrium, leading to surpluses, while price ceilings are maximum prices set below the equilibrium, leading to shortages.
Compare and contrast tariffs and quotas.
Both tariffs and quotas restrict international trade. Tariffs are taxes on imports, while quotas are quantity limits on imports.
What is the difference between consumer surplus and producer surplus?
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, while producer surplus is the difference between what producers receive and their cost of production.
Differentiate between elastic and inelastic demand.
Elastic demand means quantity demanded is sensitive to price changes, while inelastic demand means quantity demanded is not very sensitive to price changes.
Differentiate between elastic and inelastic supply.
Elastic supply means quantity supplied is sensitive to price changes, while inelastic supply means quantity supplied is not very sensitive to price changes.
What are the differences between a normal good and an inferior good?
Demand for normal goods increases as consumer income rises, while demand for inferior goods decreases as consumer income rises.
What is the difference between substitute goods and complementary goods?
Substitute goods can be used in place of each other (e.g., tea and coffee), while complementary goods are used together (e.g., coffee and sugar).
Compare and contrast short-run and long-run supply elasticity.
Short-run supply elasticity is generally lower because firms have limited ability to adjust production in the short term, while long-run supply elasticity is higher because firms can make more significant adjustments over time.
Analyze the graph of a demand curve shifting to the right.
Indicates an increase in demand at every price point.
Analyze the graph of a supply curve shifting to the left.
Indicates a decrease in supply at every price point.
What does a movement along the demand curve indicate?
A change in quantity demanded due to a change in price.
What does a movement along the supply curve indicate?
A change in quantity supplied due to a change in price.
Analyze a graph showing a surplus.
The quantity supplied is greater than the quantity demanded at the given price.
Analyze a graph showing a shortage.
The quantity demanded is greater than the quantity supplied at the given price.
What happens to the equilibrium price and quantity when demand increases?
Both the equilibrium price and quantity increase.
What happens to the equilibrium price and quantity when supply decreases?
The equilibrium price increases, and the equilibrium quantity decreases.
How does a price floor above the equilibrium price appear on a supply and demand graph?
It is a horizontal line above the equilibrium point, creating a surplus.
How does a price ceiling below the equilibrium price appear on a supply and demand graph?
It is a horizontal line below the equilibrium point, creating a shortage.
What is the definition of the demand curve?
The total of all individual demands at various price points.
What is the Law of Demand?
As price increases, quantity demanded decreases, and vice versa.
What is the definition of the supply curve?
The sum of all individual suppliers at different price points.
What is the Law of Supply?
As price increases, quantity supplied increases, and vice versa.
What is quantity demanded?
A specific point on the demand curve (the x-value). It changes when price changes.
What is quantity supplied?
A specific point on the supply curve (the x-value). It changes when price changes.
What is 'demand'?
Refers to the entire demand curve. It shifts due to factors other than price.
What is 'supply'?
Refers to the entire supply curve. It shifts due to factors other than price.
What is market equilibrium?
The point where the supply and demand curves intersect; quantity demanded equals quantity supplied.
Define equilibrium price and quantity.
The price and quantity at the intersection point of the supply and demand curves.