What is a normal good?

A normal good is a good for which demand increases as income rises and decreases as income falls.

What is an inferior good?

An inferior good is a good for which demand decreases as income rises and increases as income falls.

What are substitutes?

Substitutes are products that can be consumed in place of one another (e.g., coffee and tea).

What are complements?

Complements are products that are consumed together (e.g., cars and petrol).

Utility is a measure of the satisfaction that a person derives from the consumption of a product.

What is the income effect?

The income effect is the change in the consumption of goods by consumers based on their income (purchasing power).

What is the substitution effect?

The substitution effect occurs when consumers replace cheaper items (inferior goods) with more expensive ones.

Supply is the quantity of a product that firms are willing and able to produce and sell at different prices during a given time period, ceteris paribus.

What is a supply curve?

A supply curve is a curve that shows the relationship between the quantities of a product that producers are willing and able to produce and sell during a particular time period and their respective prices, ceteris paribus.

What does the law of supply state?

The law of supply states that there is a positive causal relationship between the price of a product and the quantity of the product supplied during a particular time period, ceteris paribus.

What is market supply?

Market supply is the total amount of an item that producers are willing and able to sell at different prices over a given period of time.

What are non-price determinants of supply?

Non-price determinants of supply are the non-price variables that influence the supply of a product.

What is competitive supply?

Goods in competitive supply are alternative products that a firm could make with its resources.

What is joint supply?

Joint supply describes a situation where an increase or decrease in the supply of one good leads to an increase or decrease in the supply of another by-product.

What is the short run in economics?

The short run is a time period during which at least one input (factor of production = resources) is considered fixed (unchanged in quantity and quality).

What is the long run in economics?

The long run is a time period during which all inputs can be changed.

What is the price mechanism?

The price mechanism refers to the means by which the forces of demand and supply determine the allocation of scarce resources due to market competition.

What is consumer surplus?

Consumer surplus is the additional benefit to consumers from the price they pay for their satisfaction.

What is producer surplus?

Producer surplus is the extra gain that producers enjoy when they sell a product at a price higher than what they may be willing or able to accept.

What is equilibrium price?

Equilibrium price is the price determined in a market when the quantity demanded equals the quantity supplied.

What is equilibrium quantity?

Equilibrium quantity is the quantity that is bought and sold when the quantity demanded equals the quantity supplied.

What is market equilibrium?

Market equilibrium occurs where the quantity demanded equals the quantity supplied, and there is no tendency for the price or quantity to change.

What is market disequilibrium?

Market disequilibrium occurs when there is excess demand or excess supply.

A subsidy is a direct or indirect payment to individuals or firms, usually provided by the government.

A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

A shortage (excess demand) is the excess of quantity demanded over quantity supplied.

A surplus (excess supply) is the excess of quantity supplied over quantity demanded.

Economics Concepts Flashcards Flashcards

Student preview

34 questions

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1.

FLASHCARD QUESTION

Front

What is a market?

Back

A market can be defined as a group of buyers and sellers of a particular product.

2.

FLASHCARD QUESTION

Front

What is demand?

Back

Demand is an economic concept that relates to a consumer's desire to purchase goods and services and their willingness to pay a specific price for them.

3.

FLASHCARD QUESTION

Front

What does the law of demand state?

Back

The law of demand states that there is a negative causal relationship between the price of a good and the quantity of the good demanded during a particular time period, ceteris paribus.

4.

FLASHCARD QUESTION

Front

What is a demand curve?

Back

The demand curve is a line graph used in economics that shows how many units of a good or service will be purchased at various prices.

5.

FLASHCARD QUESTION

Front

What is market demand?

Back

Market demand is the sum of all individual demands for a specific product.

6.

FLASHCARD QUESTION

Front

What are non-price determinants of demand?

Back

Non-price determinants of demand are the non-price variables that influence the demand for a product.

7.

FLASHCARD QUESTION

Front

What does TRIBE stand for in the context of demand?

Back

Tastes and preferences, Related goods, Income, Buyers in the market, Expectations of future prices.

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