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Related Flashcards
Cards In This Set
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Demand curves show _____ market behaviors.
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Buyers
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Supply curves show _____market behaviors.
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Sellers
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_____and _____ determines equilibrium price and quantity.
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'Supply and Demand
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The Efficiency Principle: efficiency is important because _____________
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Growth makes it possible for each person to have more
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The Equilibrium Principle: a market equilibrium leaves no _______ ______ for individuals.
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Unexploited opportunities
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Adam Smith thought prices are determined by ___________.
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Cost of production
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Stanley Jevons thought it was the _________
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Willingness to pay
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Alfred Marshall was the first to explain clearly how both _________________________
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Costs and willingness to pay interact to determine market prices.
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Market consists of all __________
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Actual and potential buyers and sellers of a good or service
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______ tells us how much people would buy at each possible price. It has a _____ slope.
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Demand curve
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The cost benefit principle tells us that agents will buy if the ______________
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Benefits exceed the costs
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__________ the benefit or the highest price an individual is willing to pay for one more unit of the good
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Reservation price for buyer:
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When prices _______ buyers buy more
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Go down
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The substitution effect: Buyers switch to substitutes when prices _____
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Go up
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The income effect: Buyers' overall _________ goes down.
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Purchasing power
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