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GSU - ECON 2106 - Exam One - Chapter Three (Supply and Demand) - Study

Created by: Joana Marie Elite Notetaker

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GSU - ECON 2106 - Exam One - Chapter Three (Supply and Demand) - Study

School: Georgia State University
Department: Economics
Course: Principles of Microeconomics
Professor: Professor Bueno
Term: Fall 2016
Tags: Microeconomics, supply, demand, and GeorgiaStateUniversity
Name: Exam One - Chapter Three (Supply and Demand)
Description: Here is a more condensed version of Chapter Three (Supply and Demand) I picked out the more important parts and revised my personal notes and focused on the main ideas.
Uploaded: 09/19/2016
This preview shows pages 1 - 2 of a 3 page document. to view the rest of the content
background image Microeconomics Exam #1 Chapter 3 ­ Study Guide Elite Notetaker: Joana Marie Cruz Exam Date: September 22, 2016 Microeconomics/ECON 2106 Definitions: 1. Market – a collection of buyers and sellers of a particular product or service
2. Competitive Market – a market in which there are so many buyers and sellers that each 
has only a small impact on the market price and output (the impact is almost negligible) 3. Imperfect Market – a market in which the buyer or seller has an influence on the market  price 4. Law of Demand – as price increases, the quantity demanded decreases (and vice versa); there is an inverse relationship 5. Demand Curve – a graph of the relationship between the prices in the demand schedule and the quantity demanded of those prices 6. Market Demand – the sum of all the individual quantities demanded by each buyer in a market at each price 7. Normal Goods – goods that are purchased when incomes go up
8. Inferior Goods – goods that you purchase less of when income goes up; goods that are
purchased out of necessity rather than choice 9. Complements – two goods that are used together
10. Substitutes – two goods that are used in place of each other
11. Law of Supply – as quantity increases, price increases; there is a direct relationship
12. Supply Curve – a graph of the relationship between the prices in the supply schedule and
the quantity supplied at those prices 13. Market Supply – the sum of the quantities supplied
14. Inputs – resources used in the production process
15. Subsidy   –   a   payment   made   by   the   government   to   encourage   the   consumption   or production of a service 16. Taxes – an amount of money demanded by the government  17. Shortage – quantity supplied is less than quantity demanded
18. Surplus – quantity supplied is greater than quantity demanded
19. Equilibrium – the point at which the demand and supply curve intersect;
20. Equilibrium Price / Market Clearing Price – the price at which there are no shortages or
surpluses 21. Equilibrium Quantity – the quantity at which there are no shortages or surpluses
background image Important Concepts: 1. When it comes to demand, there is an inverse relationship ­  when quantity increases,  price decreases, when quantity decreases, price increases 2. A shift to the right means an increase in demand, a shift to the left means a decrease in  demand a. The only factors that shift the demand curve are the determinants of demand
b. Price is not a demand shifter; When there is a change in price, there is not a shift 
in the demand curve, there is a movement along the demand curve 3. Determinants of Demand: Change in Income o Normal Goods and Inferior Goods come into play Ex. Coca­Cola would be a normal good, store brand ‘Cola’ would be an 
inferior good; Steak would be a normal good, Spam would be an inferior 
good
Changes in Tastes and Preferences o Demand is likely to go up if it is popular/in style Ex. iPhones are in higher demand than Androids because of its popularity Price of Related Goods o Complements and Substitutes are involved Ex. Peanut butter and jelly are complements because they are usually 
bought together; For those who don’t have a particular preference, Coke 
and Pepsi are substitutes
Related Good Price of Good X Demand of Good X Demand of Good Y Complement Increases Decreases Decreases Complement Decreases Increases Increases Substitute Increases Decreases Increases Substitute Decreases Increases Decreases Expectations Regarding the Future Price o If people believe that the price is going to be cheaper in the future, they are more  likely to purchase the product in the future Number of Buyers in the Market o More buyers = higher demand o Demographics can be a factor in the number of buyers in a market Ex. Countries with different aging populations have different demands 4. When it comes to supply, there is a direct relationship ­  when quantity increases, price  increases; when quantity decreases, price decreases 5. A shift to the right means an increase in supply, a shift to the left means a decrease in  supply a. The only factors that shift the supply curve are the determinants of supply

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School: Georgia State University
Department: Economics
Course: Principles of Microeconomics
Professor: Professor Bueno
Term: Fall 2016
Tags: Microeconomics, supply, demand, and GeorgiaStateUniversity
Name: Exam One - Chapter Three (Supply and Demand)
Description: Here is a more condensed version of Chapter Three (Supply and Demand) I picked out the more important parts and revised my personal notes and focused on the main ideas.
Uploaded: 09/19/2016
3 Pages 37 Views 29 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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