23 terms in 4.1.3
Price elasticity of supply
Price elasticity of supply (PES) measures how much the quantity supplied changes when the price of a good changes. You c
Price determination in a competitive market
Price elasticity of supply
Several factors determine how easily producers can increase output when prices rise. These factors make supply either el
Price determination in a competitive market
Price elasticity of supply
Price elasticity of supply (PES) measures how responsive the quantity supplied — the amount producers are willing to sel
Price determination in a competitive market
Price, income and cross elasticities of demand
Elasticity calculations measure how strongly demand reacts to a change. Each of the three types uses the same basic stru
Price determination in a competitive market
Price, income and cross elasticities of demand
Income elasticity of demand measures how much demand for a good changes when consumer income rises or falls. Normal good
Price determination in a competitive market
Price, income and cross elasticities of demand
Cross elasticity of demand measures how the demand for one good changes when the price of a different good changes. The
Price determination in a competitive market
Price, income and cross elasticities of demand
When a firm changes its price, total revenue either rises or falls depending on how sensitive customers are to that pric
Price determination in a competitive market
Price, income and cross elasticities of demand
Several factors determine how sensitive demand is to a price, income, or related-price change. Knowing these factors hel
Price determination in a competitive market
Price, income and cross elasticities of demand
Elasticity measures how sensitive demand is to a change in something — and this subtopic extends that idea beyond price
Price determination in a competitive market
The determinants of the demand for goods and services
A demand curve is a graph that shows how many units of a good consumers will buy at each possible price. As price rises,
Price determination in a competitive market
The determinants of the demand for goods and services
A demand curve shifts when something other than price changes consumers' willingness or ability to buy. Factors like inc
Price determination in a competitive market
The determinants of the demand for goods and services
Demand — the quantity of a good or service that consumers are willing and able to buy at a given price — is not fixed; i
Price determination in a competitive market
The determinants of the supply of goods and services
A supply curve is a graph that shows how much of a good producers will sell at each possible price. As price rises, quan
Price determination in a competitive market
The determinants of the supply of goods and services
When the price of a good rises, firms earn more profit on each unit they sell. That extra profit motivates them to produ
Price determination in a competitive market
The determinants of the supply of goods and services
Several factors can cause producers to supply more or less at every price level. These factors shift the entire supply c
Price determination in a competitive market
The determinants of the supply of goods and services
Supply — the quantity of a good or service that producers are willing and able to offer for sale at a given price — is d
Price determination in a competitive market
The determination of equilibrium market prices
In a competitive market, buyers and sellers constantly push price toward one level. At that level, the amount buyers wan
Price determination in a competitive market
The determination of equilibrium market prices
Equilibrium is the market state where quantity demanded equals quantity supplied. Disequilibrium is any situation where
Price determination in a competitive market
The determination of equilibrium market prices
When buyers want more than sellers offer, price rises. When sellers offer more than buyers want, price falls. These pres
Price determination in a competitive market
The determination of equilibrium market prices
When buyers and sellers interact in a competitive market, price is driven toward an equilibrium — the point where the qu
Price determination in a competitive market
The interrelationship between markets
Markets are connected. A change in price or supply in one market can shift demand or supply in another market entirely.
Price determination in a competitive market
The interrelationship between markets
Some goods are linked — buying, using, or producing one affects demand or supply for another. These five relationships d
Price determination in a competitive market
The interrelationship between markets
Markets rarely operate in isolation — a price change or supply shock in one market will typically ripple through to othe
Price determination in a competitive market