Microeconomics - Demand, Supply, and Market Equilibrium

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These flashcards cover key concepts, definitions, and principles related to microeconomics specifically focusing on demand, supply, and market equilibrium.

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10 Terms

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Demand

A schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each possible price during specified periods of time.

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Law of Demand

As price falls, the quantity demanded rises, and as price rises, the quantity demanded falls, assuming other factors are constant.

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Price Ceiling

A maximum price set by the government that is below the equilibrium price, leading to potential shortages.

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Price Floor

A minimum price set by the government that is above the market price, leading to potential surpluses.

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Market Equilibrium

The point where the demand curve and supply curve intersect, establishing the equilibrium price and quantity.

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Determinants of Demand

Factors that can cause the demand curve to shift, including changes in consumer tastes, income levels, and the prices of related goods.

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Determinants of Supply

Factors that can cause the supply curve to shift, including changes in resource prices, technology, and the number of suppliers.

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Substitute Good

A good that can be used in place of another good; an increase in the price of one leads to an increase in demand for the other.

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Complementary Good

A good that is typically consumed together with another good; a decrease in the price of one leads to an increase in demand for the other.

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Efficient Allocation

Producing the right mix of goods that are most highly valued by society.