Professional Documents
Culture Documents
1. Use assumptions
9. Real Nominal Principle: People care about the real value of goods
not the nominal value
1. Perfectly Competitive Market: A market with many sellers and
buyers of a homogeneous product and no barriers to entry.
13. Minimum Supply Price: The lowest price at which a product will
be supplied.
"
Increase
Decrease
Increase
Population
Increase
Increase
Increase
"
Decrease
Increase
Decrease
Increase
Population
Decrease
Decrease
Decrease
Wage
Decrease
Decrease
Technology advance
Increase
Government subsidy
Increase
Decrease
Number of producers
Increase
"
Wage
Increase
Increase
Tax
Increase
Increase
Number of producers
Decrease
V%
c
Increase in demand
Increase
Increase
Decrease in demand
Decrease
Decrease
Increase in supply
Decrease
Increase
Decrease in supply
Increase
decrease
&
' c
(c()
*
+,
c
-
Availability of Substitutes
Many
Few
Passage of time
Long time
Short time
Large
Small
Necessity
Luxury
necessity
'
.
(
c
c/
'
Increasing
Decreasing
Decreasing
Increasing
c0
'
Increasing
Increasing
Decreasing
Decreasing
1
(c(
2*
3
c
'
4
Income elasticity
Normal goods
Inferior goods
Cross-price elasticity
Substitute goods
Complementary goods
c(
*
,
Higher price causes increased output by existing producers but limited by principle of
diminishing return,
,
#
'
(
*1c5c
.
6 -
"
Increase
Income, with inferior good
Decrease
Increase
Decrease
Population
Increase
Increase
Increase
"
Decrease
Increase
Decrease
Increase
Population
Decrease
Consumer preference for good
Decrease
Decrease
"
Wage
Decrease
Decrease
Technology advance
Increase
Government subsidy
Increase
Decrease
Number of producers
Increase
"
Wage
Increase
Tax
Increase
Increase
Number of producers
Decrease
V%
c
Increase in demand
Increase
Increase
Decrease in demand
Decrease
Decrease
Increase in supply
Decrease
Increase
Decrease in supply
Increase
decrease
' c
(c()
*
+,
elastic demand= Price elasticity of demand > 1
c
-
Availability of Substitutes
Many
Few
Passage of time
Long time
Short time
Large
Small
Necessity
Luxury
necessity
'
.
(
c
c/
'
Increasing
Decreasing
Decreasing
Increasing
c0
'
Increasing
Increasing
Decreasing
Decreasing
1
(c(
2*
3
c
'
4
Income elasticity
Normal goods
Inferior goods
Cross-price elasticity
Substitute goods
Complementary goods
' c
(c(
*
,
Higher price causes increased output by existing producers but limited by principle of
diminishing return,
,
#