Chapter 4 - Demand, Supply, and Market Equilibrium

supply curve

The ________ shows the marginal cost of production for different quantities produced.

model of demand

The ________ and supply explains how a perfectly competitive market operates.

positive relationship

For a normal good, there is a(n) ________ between consumer income and the quantity consumed.

Consumers

________ buy smaller quantities of an inferior product when their income increases.

Taxes

________ paid to the government or subsides (payments from the government to firms to produce a product)

equilibrium price

If the ________ and quantity move in opposite directions, the changes were caused by a change in supply.

Excess supply

________ (sometimes called a surplus) occurs when the quantity supplied exceeds the quantity demanded, meaning that producers are willing to sell more than consumers are willing to buy.

Excess demand

________ (sometimes called a shortage) occurs when, at the prevailing market price, the quantity demanded exceeds the quantity supplied, meaning that consumers are willing to buy more than producers are willing to sell.

competitive market

A perfectly ________ has many buyers and sellers for a product, so no single buyer or seller can affect the market price.

individual consumer

It shows the relationship between the price and the quantity demanded by a(n) ________, ceteris paribus.

entire package

When two goods are complements, they are consumed together as a package, and a decrease in the price of one good decreases the cost of the ________.

consumers preferences

The ________ or tastes and advertising that may influence preferences.

single supply curve

A movement along a(n) ________ is called a change in quantity supplied, a change in the quantity a producer is willing and able to sell when the price changes.

demand curve

The market moves downward along the ________, increasing the quantity demand.

equilibrium price

If the ________ and quantity move in the same direction, the changes were caused by a change in demand.

supply curve

The market moves downward along the ________, decreasing the quantity supplied.

Excess Supply

________ Causes the Price to Drop.

supply curve

The market moves upward along the ________, increasing the quantity supplied.

individual supply

The starting point for a discussion of ___________ is a supply schedule, a table that shows the relationship between the price of a particular product and the quantity that an individual producer is willing to sell.

individual supply curve

The ______________________ is a graphical representation of the supply schedule.

change in demand

To convey the idea that changes in these other variables change the demand schedule and the demand curve, we say that a change in any of these variables causes a __________________.