Microeconomics section 2.1 (Definitions)

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  • Created by: Amalie
  • Created on: 14-03-13 09:15
Demand
the willingness and ability to purchase a quantity of a good or service at a certain price over a given timeperiod.
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Law of Demand
as the price of a good falls, the quantity demanded will decrease, ceteris paribus.
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Veblen Goods
goods that are exceptions to the Law of Demand, where at high prices, as price rises, then so does demand. This is because the product achieves "snob value".
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Giffen Goods
goods that are exceptions to the Law of Demand, where at very low prices, with consumers on low incomes and dependent on the good for survival, as price rises, then so does demand.
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Supply
it is the willingness and ability of a producer to produce a quantity of a good or service at a given price, in a given time period.
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Law of Supply
as the price of a good rises, the quantity
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Equilibrium price
it is the market-clearing price. it is set where D=S
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Maximum price
a price imposed by an authority and set below the equilibrium price. prices cannot rise above this price.
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Minimum price
a price imposed by an authority and set above the equilibrium price. Prices cannot fall below this price
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Buffer stock scheme
a situation where a government intervenes in a market to stabilise prices by buying up surplus stock when prices would go too low or by supplying stock from a previously built up "buffer stock" when prices would go too high.
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Other cards in this set

Card 2

Front

Law of Demand

Back

as the price of a good falls, the quantity demanded will decrease, ceteris paribus.

Card 3

Front

Veblen Goods

Back

Preview of the front of card 3

Card 4

Front

Giffen Goods

Back

Preview of the front of card 4

Card 5

Front

Supply

Back

Preview of the front of card 5
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