Is a positive statement always true?
A statement of fact or a hypothesis is a positive statement Note also that positive statements can be false, but as long as they are testable, they are positive
What happens to demand when we drop the ceteris paribus rule?
What happens to demand when we drop the ceteris paribus rule? The entire demand curve can shift
What are the 2 variables needed to calculate demand?
What are the two variables needed to calculate demand? The price of product and the quantity available at a given point in time
Is the demand curve always downward sloping?
Following the law of demand, the demand curve is almost always represented as downward-sloping This means that as price decreases, consumers will buy more of the good Two different hypothetical types of goods with upward-sloping demand curves are Giffen goods and Veblen goods
How does ceteris paribus effect a demand curve?
How does the ceteris paribus assumption affect a demand curve? It allows the demand curve to exist as a constant without variables other than price affecting it If their income effect stays the same and the cost of goods and services either go up or down, then it has an effect on your purchasing power
Do buyers determine both demand and supply?
Buyers determine both demand and supply Buyers determine demand, and sellers determine supply For a market for a good or service to exist, there must be a A
What are the 6 factors that affect demand?
6 Important Factors That Influence the Demand of Goods
- Tastes and Preferences of the Consumers: ADVERTISEMENTS:
- Income of the People: The demand for goods also depends upon the incomes of the people
- Changes in Prices of the Related Goods:
- Advertisement Expenditure:
- The Number of Consumers in the Market:
- Consumers’ Expectations with Regard to Future Prices:
Does an increase in demand always lead to a rise in price?
When demand exceeds supply, prices tend to rise There is an inverse relationship between the supply and prices of goods and services when demand is unchanged However, when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa25 มิย 2562
Why do prices go up when demand goes up?
When there is more demand, prices will go up because many people want to buy the same item but there is not enough supply for it When demands for new goods and services go up, new markets come into being The greater the demand, the faster this happens
When there is excess demand in the economy price level tends to?
a Excess demand causes the price to rise and quantity demanded to decrease 1 If demand and supply change in opposite directions, then the change in theequilibrium price can be determined, but the change in the equilibrium
Does lower demand increase price?
As we can see on the demand graph, there is an inverse relationship between price and quantity demanded Economists call this the Law of Demand If the price goes up, the quantity demanded goes down (but demand itself stays the same) If the price decreases, quantity demanded increases
What impact would a sudden increase in the price of wood?
The direct relation which is between the price and quantity Therefore, when the price of wood increases, then the producers increases the quantity which is produced as they are willing to sell more at a higher price
When supply is higher than demand prices will?
When supply is higher than demand, the market enters a state of disequilibrium called a surplus when demand is higher than supply, the market enters a state of disequilibrium called shortage Describe what happens to price when equilibrium is disturbed
What are the exceptions to law of demand?
The three exceptions to the law of Demand are Giffen goods, Veblen effect and income change
Is Salt a Giffen good?
Giffen goods: Giffen goods are some special varieties of inferior goods Cheaper varieties of goods like bajra, potatoes, salt etc comes under giffen goods So, rise in price of these goods does not change the demand for these goods
What is a Giffen good example?
Examples of Giffen goods can include bread, rice, and wheat These goods are commonly essentials with few near-dimensional substitutes at the same price levels
Does law of demand always exist?
Answer: yes the law of demand always exist
What are the 3 concepts of demand?
An effective demand has three characteristics namely, desire, willingness, and ability of an individual to pay for a product The demand for a product is always defined in reference to three key factors, price, point of time, and market place
Why is law of demand called a law?
Why is the Law of Demand called a “Law” ? The Law of Demand states that the quantity demanded of a product varies directly with its price False The market demand curve that shows the Quantities Demanded by everyone who is interested in purchasing a product at all possible prices
How is the current demand for a good related to its future?
How is the current demand for a good related to its future price? If the price is expected to drop, current demand will fall If the price is expected to drop, current demand will rise The percentage change in quantity demanded is exactly equal to the percentage change in price
What is a good that replaces another demanded good?
Substitution Effect
When someone chooses to purchase one item over another because it is cheaper this is known as what?
The answer would be Substitution Effect I think The idea that as prices rise (or incomes decrease) consumers will replace more expensive items with less costly alternatives
When buyers will purchase exactly as much?
EQUILIBRIUM is the condition that has been reached when the buyers will purchase exactly as much as sellers are willing to sell Market equilibrium is the market state where the supply in the market is equal to the demand in the market
What is the name of the smallest amount that can legally?
26 Cards in this Set
| What happens when wages are set above the equilibrium level by law? | Firms employ fewer workers than they would at the equilibrium wage |
|---|---|
| What is the name of the smallest amount that can legally be paid to most workers for an hour of work? | minimum wage |
Is defined as the minimum amount that can legally be charged for a good or service?
Ex: A basic lesson of a price floor is that when it is set above the market equilibrium price, this will lead to excess supply Ex: A price floor is defined as the minimum amount that can legally be charged for a good or service An effective price floor is set above equilibrium and is meant to help the producer
What happens when the supply of a good is greater than the consumer wants to buy?
Excess supply means that producers will make less of the good Undersupply means that the good will become very expensive Quantity supplied will exceed quantity demanded, so the price will drop