christos louka

• Price


  The sum of money you have to pay for a good or service(determined by interaction of supply and demand)
• Efficiency


  The optimal production and distribution of goods and services
• Equilibrium price and quantity


  Where the quantity supplied exactly matches the quantity demanded
• Allocation of Resources


  How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers
• Determination of price


  The interaction of the free market forces of demand and supply to establish the general level of price for a good or service
• Market forces


  The economic factors that influence the price and quantity of goods and services in a market
• Signalling


  Prices signal where resources are needed
• Transmission of preferences


  Through their choices consumers send information to producers about the changing nature of needs and wants
• Rationing


  limiting of goods and services that are high in demand and in short supply
• Supply


  Amount of a resource producers are able to provide to the market and consumers
• Law of Supply


  producers offer more of a good as its price increases and less as its price falls
• Individual supply


  the supply of an individual producer
• Market supply


  The total supply supplied by all producers
• Movement along the supply curve

  the change in quantity supplied brought about by a change in price
• Shift of the supply curve

  movement of a supply curve left or right resulting from a change in one of the determinants of supply other than the price of the good
• Subsidy


  A government payment that supports a business or market
• Tax


  a required payment to a local, state, or national government
• Elastic supply


  When a small change in price causes a major change in the quantity supplied
• Inelastic supply


  exists when a change in a good's price has little impact on the quantity supplied
• PES


  responsiveness of quantity supplied to a change in price
• Causes of shifts in the supply curve

  P-production costs

  I-income tax

  N-number of firms

  T-technology

  S-subsidy

  W-wages

  C-cost of production
• Law of demand


  the quantity demanded varies inversely with its price
• Individual demand


  The demand for a good or service by an individual consumer
• Market demand


  the demand by all the consumers of a given good or service
• Movement along the demand curve

  When the price changes, leading to a movement up or down the existing demand curve
• shift of the demand curve


  movement of a demand curve right or left resulting from a change in one of the determinants of demand other than the price of the good
• subsidy


  A government payment that supports a business or market
• Tax


  a required payment to a local, state, or national government
• Elastic demand


  when the percentage change in quantity demanded is greater than the percentage change in price
• Inelastic demand


  when the percentage change in the quantity demanded is less than the percentage change in price
• price elasticity of demand

  The responsiveness of quantity demanded to a chnage in the price of the product
• Causes of shift in demand curve

  P-population

  A-advertising

  S-substitutes

  I-income

  F-fashion

  I-interest rates

  C-complemets
• PED equation


  % change in quantity demanded / % change in price
• Perfectly inelastic


  quantity does not respond at all to changes in price (E=0)
• Inelastic


  a given change in price causes a relatively smaller change in the quantity demanded
• Elastic


  when a given change in price causes a relatively larger change in quantity demanded
• Unitary


  when price goes up but quantity demanded decreases by the same amount
• Perfectly Elastic


  price goes up, quantity demanded falls by infinite amount
• Competition


  where different firms are trying to sell a similar product to the consumer
• Monopoly


  A sole producer or seller of a good or service