Demand and Supply

Quantity Demanded

The amount of any good/service people are willing to buy during a specified period at a specified price.

Change in Quantity Demanded

Change in price.

Law of Demand

If the price of a good rises, the quantity demanded decreases; if the price falls, the quantity demanded increases.

Substitution Effect

A rise in price encourages someone to buy more of a substitute, and a fall in price encourages someone to buy less of the substitute.

Income Effect

A rise in price results in purchasing less of an item (can't afford as many), while a decrease in price results in purchasing more (can afford more).

Demand

The relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same.

Demand Schedule

A list of prices and the quantity demanded at each price when all other influences remain the same.

Demand Curve

A graph of a demand schedule.

Market Demand

The sum of the demands of all buyers in a market.

Changes in Demand

When any influence on buying plans other than the price of the good changes.

Normal Good

A rise in income increases demand, and a fall in income decreases demand.

Inferior Good

A rise in income decreases demand, and a fall in income increases demand.

Population Influence on Demand

As the population increases, demand increases.

Substitute Goods

Goods that can be consumed in place of another.

Complement Goods

Goods that are consumed alongside another good.

Change in Quantity Demanded

Change in prices when all other influences remain the same.

Change in Demand

The effect of a change in any of the other influences on buying plans.

Market Supply

The sum of the supplies of all sellers in a market.

Law of Supply

If the price of a good rises, the quantity supplied increases; if the price falls, the quantity supplied decreases.

Supply Schedule

A list of the quantities supplied at each different price when all other influences remain the same.

Supply Curve

A graph of a supply schedule.

Profit Effect

The tendency for prices to incentivize production; pricier items encourage more production.

Equilibrium

The point when quantity demanded equals quantity supplied.

Equilibrium Quantity

The quantity bought and sold at the equilibrium price.

Law of Market Forces

When there is a surplus of a good, its price falls; when there is a shortage, its price rises.