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14 Cards in this Set
- Front
- Back
define supply
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controlld by producer. it is that which is available for sale
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When increases in supply occur
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1. new discovery
2. increased production or efficiency 3. Transfer use of existing product 4. New Company enter market |
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When decreases in the supply occur
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1. recall withdraw
2. destruction of merchandise 3. Product withdrawn by manufacturer 4. firm exits market |
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Supply curve behavior
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increases to the right
decreases to the left |
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define demand
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controlled by consumer. It is desire coupled with the ability to buy.
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when demand increases
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1. ads, promotion
2. new use for established product 3. improved product, new appeal 4. substitute use 5. taxes go down |
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when demand decreases
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1. bad press
2. end of a fad 3. duplicate product starts to compete 4. other is better bargain 5. taxes go up |
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demand curve behavior
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increases to the right, decreases to the left
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define elasticity
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change in price causes shift in demand
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define inelasticity
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price change causes little or no shift in demand
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equilibrium
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the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell
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surplus
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at a given price, the amount by which quantity supplied exceeds quantity demanded; a surplus usually forces down the price
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shortage
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at agiven price, the amount by which the quantity demanded exceeds quantity supplied; a shortage usually forces the price up
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transaction costs
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the cost of time and information needed to carry out market exchange
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