Demand, Supply, and Market Equilibrium

These flashcards cover essential concepts from the lecture notes on macroeconomics focusing on demand, supply, and market equilibrium.

Product Markets

Markets in which goods and services are exchanged.

Input Markets

Markets in which factors of production are exchanged.

Quantity Demanded (Qd)

The amount of a product that a household would buy in a given period at a current market price.

Quantity Supplied (Qs)

The amount of a product that a firm would be willing to offer for sale at a particular price during a given time period.

Law of Demand

The negative relationship between price and quantity demanded; as price rises, quantity demanded decreases.

Normal Goods

Goods for which demand increases when income rises.

Inferior Goods

Goods for which demand decreases when income rises.

Determinants of Demand

Factors that influence the demand for goods, including price, income, tastes, and prices of related goods.

Complements

Goods that are consumed together; a decrease in the price of one increases the demand for the other.

Substitutes

Goods that can replace each other; an increase in the price of one increases the demand for the other.

Market Equilibrium

The condition that occurs when quantity supplied equals quantity demanded.

Excess Demand

A situation where quantity demanded exceeds quantity supplied at a given price.

Excess Supply

A situation where quantity supplied exceeds quantity demanded at a given price.

Price Ceiling

A maximum price set by the government that is below the equilibrium price.

Price Floor

A minimum price set by the government that is above the equilibrium price.

Tariff

A tax on imports.

Rationing Mechanism

The method by which markets allocate resources when demand exceeds supply.