Studied by 2 peoplecompetitive market
a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold
supply and demand model
a model of how a competitive market works
demand schedule
shows how much of a good or service consumers will be willing and able to buy at different prices
quantity demanded
the actual amount of a good or service consumers are willing and able to buy at some specific price
demand curve
a graphical representation of the demand schedule. it shows the relationship between quantity and demanded price
law of demand
when price increases, quantity decreases
change in demand
shift of the demand curve which changes the quantity demanded at any given price
movement along the demand curve
a change in the quantity demanded of a good that is the result of a change in that good’s price
substitutes
a rise in price of one good leads to an increase in demand for the other good
complements
a rise in price of one good leads to a decrease in demand for another good
normal good
when a rise in income increases the demand for a good
inferior good
when a rise in income decreases the demand for a good
individual demand curve
illustrates the relationship between quantity demanded and price for an individual consumer
factors that shift the demand curve
Tastes and preferences
prices of Related goods
Income
the number of Buyers
Expectations
quantity supplied
the actual amount of a good or service people are willing to sell at some specific price
supply schedule
shows how much of a good or service producers would supply at different prices
supply curve
shows the relationship between the quantity supplied and the price
law of supply
when price increases, quantity increases
change in supply
a shift of the supply curve, which changes the quantity supplied at any given price
movement along the supply curve
a change in the quantity supplied of a good arising from a change in the good’s price
input
a good or service that is used to produce another good or service
individual supply curve
illustrates the relationship between quantity supplied and price for an individual producer
factors that shift the supply curve
Input prices
prices of Related goods
Expectations
Number of producers
Technology
equilibrium
when no individual would be better off doing something different
equilibrium price
when the price has moved to a level at which the quantity demanded equals the quantity supplied
equilibrium quantity
the quantity of the good bought and sold at the equilibrium price
surplus
when the quantity supplied exceeds the quantity demanded. Occurs when the price is above its equilibrium level
shortage
when the quantity demanded exceeds the quantity supplied. occur when the price is below the equilibrium level
Note
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