Market Economy

Law of demand

States that price of a product increases the quantity demanded decrease. And as Price of the product decreases quantity demanded increases

Law of Supply

States that when price of a good increases the quantity supplied rises and the price of a good falls the quantity supplied falls.

Individual demand

IS the quantity of a good an individual consumer demands at different prices.

Market Demand

IS the total quantity of a good that all consumers demand at different prices.

Individual Supply

The quantity of a good an individual firm is willing to supply at different prices

Market Supply

The quantity of a good that all firms are willing to supply at different prices

Supply

The amount of a product or service that producers are willing and able to sell at various prices over a certain period.

Market equilibrium

Where quantity demanded equals quantity supplied and there is no tendency for price changes.

Law of Diminishing Marginal Utility

That as more units of a good are consumed, a point will be reached where marginal (extra) utility eventually begins to decline

Equi-marginal principle of consumer behaviour

States that consumers will spend their limited income in such a way so the ratio of marginal utility to price is the same for every good consumer in order to maximise utility.