Microeconomics

Flow of all goods and services within an economy Circular Flow

Market where all resources (factors of production) are sold Factor Market

Market where all goods and services are sold Product Market

Law that says as prices rise, the quantity demand will fall and vise versa Law of Demand

Total amount consumers will purchase at all possible prices Demand

Single amount consumers will purchase at a single price Quantity Demand

Determinants of Demand Income N Number of consumers S Price of substitute goods E Future price expectations C Price of complementary goods T Taste and preferences

Increases in Demand P D2 D Q

Decreases in Demand P D D2 Q

Law that says as prices rise, the quantity supplied will rise and vise versa Law of Supply

Total amount producers will provide at all possible prices Supply

Single amount producers will provide at a single price Quantity Supply

Determinants of Supply Cost of resources O Profit opportunity other goods T Technology T Taxes and Subsidies E Future Price expectations N Number of sellers

Increases in Supply P S S2 Q

Decreases in Supply P S2 S Q

Market clearing price and quantity where supply and demand are equal Equilibrium

P S P* D Q Q*

Government imposed price control; maximum price that can be charged Price Ceiling

P S P* PC D Q Q*

Government imposed price control; minimum price that can be charged Price Floor

P S PF P* D Q Q*

Temporary condition where QD is greater than QS (not enough available) Shortage

Temporary condition where QS is greater than QD (too much available) Surplus

Consumers sensitivity to changing prices Elasticity

Consumers are very sensitive to prices Elastic Demand

Consumers are not sensitive to prices Inelastic Demand

Good that consumers will purchase more of as income increases Normal Good

Good that consumers will purchase less of as income increases First image to come up on google!!! Inferior Good

Market structure with many sellers and identical goods, no control over prices Perfect Competition

Monopolistic Competition Market structure with many sellers and similar goods, some control over prices Monopolistic Competition

Market structure with a few large sellers and identical or similar goods Oligopoly

Market structure with one seller and a unique good/service Monopoly

Type of business owned by one person Sole Proprietorship

Type of business owned by 2 or more people Partnership

Type of business owned by stockholders Corporation

Money earned by businesses from sales or earned by governments from taxes Revenue

Responsibility for all actions Liability