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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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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.
Law of Demand
As price falls, the quantity demanded rises, and as price rises, the quantity demanded falls, assuming other factors are constant.
Price Ceiling
A maximum price set by the government that is below the equilibrium price, leading to potential shortages.
Price Floor
A minimum price set by the government that is above the market price, leading to potential surpluses.
Market Equilibrium
The point where the demand curve and supply curve intersect, establishing the equilibrium price and quantity.
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.
Determinants of Supply
Factors that can cause the supply curve to shift, including changes in resource prices, technology, and the number of suppliers.
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.
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.
Efficient Allocation
Producing the right mix of goods that are most highly valued by society.