a table that shows how much of a good or service consumers will be willing and able to buy at different prices
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The Law of Demand
as price rises, the quantity demanded falls
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Quantity Demanded
the actual amount of a good or service consumers are willing and able to buy at some specific price
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Demand Curve
a graphical representation of the demand schedule
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Change in Demand
a shift of the demand curve, which changes the quantity demanded at any given price
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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
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rightward shift
an increase in the demand and supply curves leades to a.......
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leftward shift
a decrease in the demand or supply curves leads to a............
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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
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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
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Normal Goods
describes a good for which a rise in income decreases the demand for the good
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Inferior Goods
describes a good for which a rise in income decreases the demand for the good
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individual demand curve
illustrates the relationship between quantity demanded and price for an individual consumer
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Quantity supplied
the actual amount of a good or service people are willing to sell at some specific price
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supply schedule
shows how much of a good or service producers would supply at different prices
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Supply curves
shows the relationship between the quantity supplied and the price
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Law of Supply
says that, other things being equal, the price and quantity supplied of a good are positively related
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Changes in Supply
a shift of the supply curve, which changes the quantity supplied at any given price
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input
a good or service that is used to produce another good or service
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substitues in production
describes two goods for which producers can use the same inputs to make either one good or the other
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Complements in production
goods that are produced as by-products from producing another good
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Individual supply curve
illustrates the relationship between quantity supplied and price for an individual producer
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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
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negative
The slope of the demand curve is always?
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positive
The slope of the supply curve is always?
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Elasticity formula
% change in quantity / % change in price
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elastic
greater than 1
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perfectly elastic
equal to infinity
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inelastic
less than 1
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perfectly inelastic
equal to 0
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unit elastic
equal to 1
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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
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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
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Elasticity of demand
the ratio of the percentage change in the quantity demanded of a product to a percentage change in its price
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prefectly inelastic demand
when the quantity demanded does not respond to changes int the price
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total revenue
Price x Quantity sold
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price effect
after a price increase, each unit sold sells at a higher price, which tends to raise revenue
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quantity effect
after a price increase fewer units are sold, which tends to lower revenue
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price elasticity of supply
a measure of the responsiveness of the quantity of a good supplied to change in the price of that good
Studied by 12 people
Note 
Flashcard (33)