Demand & Supply Curves and Economic Indices

Flashcards covering key concepts from the lecture notes on Demand & Supply Curves, Market Equilibrium, and the distinction between Real vs. Nominal values, including the role of economic indices like CPI and FPPI.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity consumers are willing and able to buy, assuming all other factors are held constant.

Law of Demand

The principle that as the price of a good increases, the quantity demanded decreases.

Derived Demand

Demand for a good that stems from the demand for another good, common in agricultural economics (e.g., demand for canola derived from canola oil).

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity producers are willing and able to sell, assuming all other factors are held constant.

Law of Supply

The principle that as the price of a good increases, the quantity supplied increases.

Market Equilibrium

The point where the demand and supply curves intersect, representing the price and quantity where the amount consumers are willing to buy exactly equals the amount producers are willing to sell.

Market-clearing Price

The price at market equilibrium where there is no surplus or shortage of a good.

Shortage (Excess Demand)

A market condition that occurs when the price is below the equilibrium, meaning demand is greater than supply.

Surplus (Excess Supply)

A market condition that occurs when the price is above the equilibrium, meaning supply is greater than demand.

Nominal Value

A value measured in current prices that has not been adjusted for inflation.

Real Value

A value that has been adjusted for inflation to reflect changes in purchasing power over time.

Canadian Consumer Price Index (CPI)

A price index used to measure inflation by tracking the average price of a standardized 'basket' of goods and services that a typical household buys.

Inflation

A rate of change to the overall price level, where each period's inflation builds upon the previous period's inflated prices, thereby eroding purchasing power.

Farm Product Price Index (FPPI)

An index maintained by Statistics Canada that measures changes in the prices farmers receive for agricultural products they sell, such as grains, oilseeds, and livestock.

Slope of a Curve

A measure that reflects the rate of change between two variables, calculated as Rise (y) / Run (x).

Marginal Analysis

An economic approach that informs an understanding of the complex relationships among demand, supply, price, and quantity.