Economics Chapter 4

Demand

the amount of a good that is bought at a certain price under certain conditions; the relationship between a good’s price and the amount that people are willing and able to buy

Supply

quantity of a good at a certain price under certain conditions; relationship between a good’s price and the amount a producer supplies for a consumer

Value in Use

value gained from the direct benefit of using a good; this value varies from person to person

Value in Exchange

value gained exchanging for another good

Price

the amount of money an individual will pay for an item; value in exchange

Market Price

the price at which a good can be sold in a market; AKA “store price” of a good

Marginal Utility

the amount of satisfaction gained from using one unit of a good

Total Utility

the amount of satisfaction gained from using all units of a good

The Basic Law of Demand

Other things remaining equal, as the price of a good increases, the quantity demanded decreases

Income Effect

when the price of a good falls, more of that good will be bought; the opposite is true as well

Substitution Effect

less expensive goods will be substituted in the place of more expensive goods

Demand Schedule

a list that compares the price of a good with the quantity demanded

Demand Curve

graphic representation that compares the price of a good quantity demanded

The Basic Law of Supply

Other things remaining equal, as the price of a good increases, the quantity supplied also increases

Supply Schedule

a list of numbers that compares price with quantity supplied

Supply Curve

a graphic representation of the quantity of goods supplied at different prices

Bartering

What are most of AKA Trading value accomplished through

Price

What affects quantity demanded

Down and to the right

How will the demand curve always move

Up and right

How will the Supply Curve move