A good for which demand increases when income rises and decreases when income falls
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Inferior Goods Definition
A good for which demand decreases when income rises and increases when income falls
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It will increase
If the number of consumers increases, what happens to demand?
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Substitute Definition
A good that has many of the same characteristics as, and can be used in place of, another good
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Complement Definition
A good that usually is consumed or used together with another good
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Movement Along the Curve Definition
When the quantity demanded changes because of a change in the price of goods
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Shift In the Curve Definition
When a change in something other than price affects the quantity demanded
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Consumers, firms
Demand is the behavior of ______ while supply is the behavior of _______
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Supply Definition
A relationship between price and quantity supplied
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Quantity Supplied Definition
The quantity of a food that firms are willing to sell at a given price
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Supply Schedule Definition
A tabular representation of supply showing the price and quantity supplied of a particular good, all else being equal
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Positive relationship
Price and quantity supplied have what kind of relationship?
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Law of Supply Definition
the tendency for the quantity supplied of a good in a market to increase as its price rises
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Supply Curve Definition
A graph of supply showing the upward-sloping relationship between price and quantity supplied
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Shows increased incentive to produce more with increased prices
Why does the supply curve have a positive slope?
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New technology, weather, price of inputs in production, the number of firms in the market, expectations of future prices, government taxes, subsidies and regulations
What are some examples of things that can cause the supply curve to shift?
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Supply and Demand Model
Supply + Demand =
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False, the market determines the price through economic interaction between consumers and firms
True or False : A person determines the price in a market
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Preferences of consumers, the number of consumers in the market, consumers’ income, expectations of future prices, price of related goods
What are some examples of things that can cause the demand curve to shift?
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Shortage Defintion
A situation in which quantity demanded is greater than quantity supplied
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Surplus Definition
A situation where quantity supplied is greater than quantity demanded (price is too high)
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an equilibrium price
Both shortages and surpluses can be solved when the price reaches….
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Equilibrium Price Definition
The price at which quantity supplied = quantity demanded
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Equilibrium Quantity Definition
The quantity traded at the equilibrium price
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Market Equilibrium Definition
The situation in which the price is equal to the equilibrium price and the quantity traded equals the equilibrium quantity
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