Supply/Demand Test

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demand curve

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20 Terms
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demand curve

a curve that shows the relationship between the price of a product and the quantity of the product demanded

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Supply Curve

A curve that shows the relationship between the price of a product and the quantity of the product supplied.

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Quantity Demanded

the amount of a good that buyers are willing and able to purchase

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Quantity Supplied

the amount of a good that sellers are willing and able to sell

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Change in Quantity Demanded

a movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price

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Change in Quantity Supplied

a movement along the supply curve that occurs in response to a change in price

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shortage

A situation in which quantity demanded is greater than quantity supplied

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surplus

A situation in which quantity supplied is greater than quantity demanded

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equilibrium price

the price at which the quantity demanded equals the quantity supplied

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equilibrium quantity

the quantity supplied and the quantity demanded at the equilibrium price

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input costs

the price of the resources needed to produce a good or service

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change in demand

a shift of the demand curve

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change in supply

a shift of the supply curve

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normal goods (superior goods)

direct relationship with income. If income goes up, demand goes up. If income falls, demand falls.

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inferior goods

Goods for which demand tends to fall when income rises and demand goes up when income falls.

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Complements

two goods for which an increase in the price of one leads to a decrease in the demand for the other Ex. Hot dogs and Buns

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Substitutes

two goods for which an increase in the price of one leads to an increase in the demand for the other Ex. Pepsi and Coke

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demand schedule

a table that shows the relationship between the price of a good and the quantity demanded

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supply schedule

a table that shows the relationship between the price of a good and the quantity supplied

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Equilibrium

the price at which demand equals supply/where the demand and supply curve intersect or cross.

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