Econ 4.2

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  • Created by: Amy Hao
  • Created on: 10-12-12 05:01
Define allocation of resources
Because of scarcity, not every person’s wants can be satisfied so it must be decided whose wants to satisfy
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Describe shape of demand curve
Contraction-The higher the price of a good, the less people will demand that good
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6 factors that affect demand
-price-consumer taste-income available to consumer-prices of substitutes-interest rates-consumer population
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Describe shape of supply curve
Extension-The higher the price, the higher the quantity supplied
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5 factors that affect supply
-cost of FOP-prices of other goods/services-technology advance-business expectations
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Define equilibrium price
the point where the supply and demand curve crosses
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explain excess supply
above equilibrium price, allocative inefficiency
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explain excess demand
Because the price is so low, too many consumers want the good while producers are not making enough of it
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Define PEd
responsiveness of demand to a change in price
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how is it shown
is shown by the degree of the demand curve
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Number for elastic demand
Over 1
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Other cards in this set

Card 2

Front

Describe shape of demand curve

Back

Contraction-The higher the price of a good, the less people will demand that good

Card 3

Front

6 factors that affect demand

Back

Preview of the front of card 3

Card 4

Front

Describe shape of supply curve

Back

Preview of the front of card 4

Card 5

Front

5 factors that affect supply

Back

Preview of the front of card 5
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