Economics Lecture Summary: Demand and Supply Models

These flashcards cover key concepts related to demand and supply from the economics lecture, focusing on definitions and principles essential for understanding market behavior.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Law of Demand

As the price of a good increases, the quantity demanded decreases, and vice versa.

Marginal Willingness to Pay

The maximum amount a consumer is willing to pay for one more unit of a good.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand decreases as consumer income rises.

Substitution Effect

The phenomenon where an increase in the price of a good leads to an increase in the quantity demanded of a substitute good.

Income Effect

The change in quantity demanded resulting from a change in consumers' purchasing power due to a price change.

Market

A place or group of buyers and sellers who trade a particular good or service.

Shifts in Demand Curve

Changes in demand due to factors other than price, such as income or preferences.

Movements along Demand Curve

Changes in quantity demanded due to a change in the price of the good itself.