Introduction to Supply and Market Equilibrium Flashcards

Vocabulary flashcards generated from the lecture transcript covering supply concepts, factors of production, curve shifts, and market equilibrium.

Supply

The fundamental relationship between price and quantity supplied.

Quantity Supplied

The specific amount of a good or service that a producer or factory manager desires to make and sell at a given observed price.

Ceteris Paribus

An economic phrase meaning holding all other variables constant so that nothing else moves except price.

Supply Schedule

A list or table displaying data points of various prices alongside their corresponding quantities supplied.

Supply Curve

The graphical representation of supply illustrating the relationship between price and quantity supplied.

Supply Function

An estimated mathematical equation that expresses quantity supplied as a function of price.

Chicago

The city identified in the transcript where commodities like eggs, wheat, apples, and copper are traded.

Factors of Production

The broad categories of inputs used in production, specifically consisting of land, labor, and capital.

Price of Land

Rent paid to the landlord for the use of land.

Price of Labor

The wage paid to workers for labor.

Price of Capital

The return earned on capital.

Increase in Supply

A literal rightward shift of the supply curve indicating that producers supply more at any given price.

Decrease in Supply

A literal leftward shift of the supply curve indicating that producers supply less at any given price.

Market Clearing Price ($P^*$)

The equilibrium price at which quantity demanded equals quantity supplied and there is no pressure for price or behavior to change.

Surplus

A situation where excess quantity supplied exists because the current price is above the market clearing level, making quantity supplied greater than quantity demanded.

Shortage

A situation where excess quantity demanded exists because the current price is below the market clearing level, making quantity demanded greater than quantity supplied.