2286391
Description
Flashcards by BryanTurner, updated more than 1 year ago
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Created by BryanTurner
over 9 years ago
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| Question | Answer |
| Define a 'market' | A place or an arrangement where buyers and sellers exchange goods and services. |
| Define 'demand' | The quantity that buyers want to buy at a reasonable price. |
| Define 'supply' | The quantity of a good that sellers want to sell at a price that should make them profit. |
| Define 'equilibrium price' | The price at which supply meets demand. |
| What's the difference between excess demand and excess supply? | Excess demand is when demand for the item exceeds the supply. Excess supply is when supply for the item exceeds the demand. |
| What's the difference between a 'substitute' and a 'complement'? | A substitute is the best valued alternative e.g. if the price of petrol increases, there's always public transport. A complement is something that works with the good i.e. petrol works with your car. |
| Define an 'inferior good' | Usually, a cheap good that's low quality that some people would buy and others would spend a little more on the normal good. |
| What is 'price control'? | Government rules/laws setting price floors and ceilings. |
| Define 'Economic Surplus' | The sum of the consumer and the producer surplus. |
| Define 'Consumer Surplus' | The area below the market demand but ABOVE the equilibrium line. |
| Define 'Producer Surplus' | The area above the market demand but BELOW the equilibrium line. |
| Define 'Price Ceiling' | Reduces the quantity supplied to lead to excess demand. Must be placed below equilibrium price for maxiumum effectiveness. |
| Define 'Price Floor' | Reduces the quantity demanded, unless the government intervenes with another plan for the demand. Must be placed above equilibrium price for maxiumum effectiveness. |
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