Demand, Supply, and Markets

These flashcards cover essential terms and concepts related to demand, supply, and market dynamics.

Demand Curve

A graph showing the amount of a product that consumers are willing and able to purchase at each possible price, assuming other factors are constant.

Law of Demand

As price falls, the quantity demanded rises, indicating an inverse relationship between price and quantity demanded.

Diminishing Marginal Utility

The reduction in added satisfaction gained from consuming additional units of a product.

Income Effect

A situation where a lower price increases the purchasing power of a buyer's income, allowing the buyer to purchase more.

Substitution Effect

The change in demand for a product based on price changes of that product compared to the prices of related products.

Market Demand

The total quantity demanded by all consumers in a market at each possible price.

Determinants of Demand

Factors that cause changes in the demand for a product, including consumer tastes, number of buyers, consumer incomes, prices of related goods, and consumer expectations.

Change in Demand

A shift of the demand curve to the right or left caused by a change in one or more of the demand determinants.

Change in Quantity Demanded

A movement from one point to another on a fixed demand curve, resulting from a change in price.

Supply Curve

A graph showing the various amounts of a product that producers are willing and able to sell at each possible price, assuming other factors are constant.

Law of Supply

As price rises, the quantity supplied rises, indicating a direct relationship between price and quantity supplied.

Marginal Cost

The change in total cost that arises when the quantity produced changes by one unit.

Individual Supply

The quantity supplied by a single producer at each of the various possible prices.

Market Supply

The total quantity supplied by all producers in the market at each possible price.