Chpt 4 The Market Forces of Supply and Demand
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13 Terms
Quantity demanded
the amount of a good that buyers are willing and able to purchase.
Law of demand
the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises.
Demand schedule
a table that shows the relationship between the price of a good and the quantity demanded.
Demand curve
a graph of the relationship between the price of a good and the quantity demanded.
Normal good
a good for which, other things equal, an increase in income leads to an increase in demand.
Inferior good
a good for which, other things equal, an increase in income leads to a decrease in demand.
Quantity supplied
the amount of a good that sellers are willing and able to sell.
Law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises.
Supply schedule
a table that shows the relationship between the price of a good and the quantity supplied.
Supply curve
a graph of the relationship between the price of a good and the quantity supplied.
Equilibrium
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded.
Equilibrium price
the price that balances quantity supplied and quantity demanded
Equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price.
