Studied by 12 peopleDemand Schedule
a table that shows how much of a good or service consumers will be willing and able to buy at different prices
The Law of Demand
as price rises, the quantity demanded falls
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
Change in Demand
a shift of the demand curve, which changes the quantity demanded at any given price
Movements 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
rightward shift
an increase in the demand and supply curves leades to a.......
leftward shift
a decrease in the demand or supply curves leads to a............
Substitutes
two goods for which a rise in the price of one of the goods leads to an increase in the demand for the other good
Complements
two goods (often consumed together) for which a rise in the price of one of the goods leads to a decrease in the demand for the other good
Normal Goods
describes a good for which a rise in income decreases the demand for the good
Inferior Goods
describes a good for which a rise in income decreases the demand for the good
individual demand curve
illustrates the relationship between quantity demanded and price for an individual consumer
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 curves
shows the relationship between the quantity supplied and the price
Law of Supply
says that, other things being equal, the price and quantity supplied of a good are positively related
Changes in Supply
a shift of the supply curve, which changes the quantity supplied at any given price
input
a good or service that is used to produce another good or service
substitues in production
describes two goods for which producers can use the same inputs to make either one good or the other
Complements in production
goods that are produced as by-products from producing another good
Individual supply curve
illustrates the relationship between quantity supplied and price for an individual producer
Market supply curve
shows how the combined total quantity supplied by all individual producers in the market depends on the market price of that good
negative
The slope of the demand curve is always?
positive
The slope of the supply curve is always?
Elasticity formula
% change in quantity / % change in price
elastic
greater than 1
perfectly elastic
equal to infinity
inelastic
less than 1
perfectly inelastic
equal to 0
unit elastic
equal to 1
substitution effect
the change in the quantity of a good demanded as the consumer substitutes the good that has become relatively cheaper for the good that has become relatively more expensive
income effect
the change in the quantity of a good demanded that results from a change in the consumers purchasing power when the price of the good changes
Elasticity of demand
the ratio of the percentage change in the quantity demanded of a product to a percentage change in its price
prefectly inelastic demand
when the quantity demanded does not respond to changes int the price
total revenue
Price x Quantity sold
price effect
after a price increase, each unit sold sells at a higher price, which tends to raise revenue
quantity effect
after a price increase fewer units are sold, which tends to lower revenue
price elasticity of supply
a measure of the responsiveness of the quantity of a good supplied to change in the price of that good
Note
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