ECON EXAM 2

How do markets work ?

• A higher price and a higher quantity.
• an economic view of the world supply and demand
• disequilibrium.
• along a supply curve as price changes

market economy

• makes the decisons about what and how to produce as well as who gets the stuff through the interaction of buyers and sellers
• equilibrium wage rate
• can any of the previous four reasons, if expectations are very negative the demand will shift
• there will always be an inverse ( indirect ) or negative relationships between price and quantity demanded

how is price determined in the product market ?

• A price is determined in the product market through the interaction of the supply decisions of competing businesses and the demand decisions of competing households
• pay not to produce ( shift supply curve to left)
• X marks the spot
• no high school education/dropout, 25 and under, works in retail, food services or daycare

how is price determined in the resource market ?

• government buys up surplus
• When the price of a good or service increases, the quantity supplied of that good or service will increase.
• along a supply curve as price changes
• A price is determined in the resource market through the interaction of the supply decisions of competing households and the demand decisions of competing businesses

demand is

• disrupt equilibrium to find another one
• As price increases, quantity supplied increases.
• Surplus, Surplus Disposal or Control Required, Distortion of Market Signals/Misallocation of Resources
• product market and consumers

demand schedule

• Above, surplus
• a schedule that shows the quantities of a good consumers are willing and able to purchase at various prices out of a set of all possible prices over a specified period of time
• product market and consumers
• When the market price is above or below the equilibrium price.

what happens to quantity demanded as price goes down

• As price increases, quantity decreases.
• quantity demanded goes up
• price goes up , demand and quantity shift to right
• A higher price and a higher quantity.

what happens to quantity demanded as price goes up

• Few buyers = decrease in demand
• good you buy more of as income falls like used cars, generic products , discount clothing
• quantity demanded goes down
• an inverse relationship between price and quantity demanded

the law of demand

• As price increases, quantity decreases.
• it must be either supply or demand changing ( or both in the real world)
• there will always be an inverse ( indirect ) or negative relationships between price and quantity demanded
• landlords know lines exist and try to extort potential clients

difference between a change in quantity and a change in demand ?

• a change in quantity demanded reflects a move along a demand curve as the price changes
• demand for labor. pushes equilibrium wages up
• supply decreases
• As price increases, quantity demanded decreases.