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https://quizlet.com/_3ra7yb

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any institution, mechanism, or arrangement that facilitates the voluntary exchange of goods and services

buyers determine demand
sellers determine supply

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price and quantity determined by all buyers and sellers as they interact

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1. goods offered for sale are exactly the same
- homogeneous goods
2. buyers and sellers are so numerous that no single buyer/seller has any influence on market price

buyers & sellers = price TAKERS --> must take market price

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quantity demanded = determinant of the price of the good

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quantity demanded = determinant of the price of the good

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quantity demanded of a good falls when the price of a good rises

inverses!

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DECREASING SLOPE

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sum of individual demands for a particular good or service

***add the numbers on horizontal axes***

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Determinants of Demand / Shifts in Demand Curve

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Determinants of Demand / Shifts in Demand Curve

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shift to the right = increase in demand
shift to the left = decrease in demand

variables
T - tastes
R - (price of) related goods
I - income
B - (number of) buyers
E - expectations
S - substitutes

# data[].attributes.body
normal good v. inferior good

normal: income increases, demand for good increases
v.
inferior: income increases, demand for good decreases

# data[].attributes.headline
Shift in Demand Curve - Price of Related Good

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Shift in Demand Curve - Price of Related Good

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substitutes v. complements

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quantity supplied for a good increases when the price of the good rises

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INCREASING SLOPE

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sum of supplies of all sellers

add quantities... ***add the numbers on horizontal axes***

# data[].attributes.headline
Determinants of Supply / Shifts in Supply Curve

# data[].attributes.subject
Determinants of Supply / Shifts in Supply Curve

# data[].attributes.body
shift to the right = increase in supply
shift to the left = decrease in supply

variables
T - technology
I - input costs
E - expectations
S - (number of) sellers
or
R - resource or input costs
O - other goods
T - taxes/subsidies
T - technology
E - expectations
N - number of suppliers

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if the price of an input goes up, production becomes less profitable

if the price of an input goes down, production becomes more profitable

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tax = additional cost of production
--> decreases supply curve

subsidy = benefit of production
--> increase supply curve

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Quantity Supplied = Quantity Demanded

equilibrium price

equilibrium quantity

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quantity supplied > quantity demanded
aka excess supply

--> cut prices until equilibrium is reached

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quantity demanded > quantity supplied
aka excess demand

--> raise prices until equilibrium is reached

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

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1. shift the demand curve, supply curve, or both?
2. shift left or right?
3. how does the shift change equilibrium price and quantity

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supply = position on supply curve; representation of all sellers in the market providing goods

demand = position on demand curve; representation of everyone in the market willing and able to purchase a good

quantity supplied = specific amount suppliers wish to sell

quantity demanded = specific amount buyers wish to purchase

-------------------------
...therefore:
shift = change in supply/demand
movement along the curve = change in quantity supplied/demanded

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when both supply and demand are changing (the ol' double shift)

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when both supply and demand are changing (the ol' double shift)

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one outcome is predictable and the other ambiguous

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monopoly
oligopoly
monopolistic competition (fast food restaurants!)

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high inflation
high unemployment
idle demand in country's economy

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size of shift must be given in order to determine both new quantity and price

if not specified, only the new quantity OR new price can be determined

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aka absolute prices
aka nominal prices

prices of good measured in units of currency

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aka real prices

number of units of any other good Y that must be sacrificed to acquire the first good X

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change in quantity demanded that results from a change in the price of one good relative to the price of other goods

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increase chance of earning more profit... increase supply of product

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increase chance of earning more profit... increase supply of product

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only increase quantity supplied of the product if the price received is high enough to cover the higher marginal cost

technological improvement usually decreases the marginal cost of producing a good

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price of one good goes up, the demand for the substitute good increases

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price of one good goes up, the demand for the complement good decreases

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amount in surplus/shortage solved for by taking difference between two quantity (x) values

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amount in surplus/shortage solved for by taking difference between two quantity (x) values

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surplus for quantity supplied of 80 and price of $80

80-20 = 60 in surplus

shortage for quantity demanded at quantity of 80 and price of $20

80-20 = 60 in shortage

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https://docs.google.com/document/d/1jam6VBwtFb_K9FX-jxuqdAym4KfXHthduMdYwmlb9Zs/edit