Business Literacy for Animal Science: How Markets Set Prices and Quantities

Demand

The relationship between the price of a product or service and the quantity buyers are willing and able to purchase at that price, holding other factors constant.

Law of Demand

States that as price goes up, quantity demanded goes down, and as price goes down, quantity demanded goes up.

Ceteris Paribus

A Latin phrase meaning 'holding other factors constant'.

Quantity Demanded

The specific amount buyers want at one particular price.

Shift of the Demand Curve

Occurs when non-price determinants, like income or preferences, change so that buyers' willingness to purchase changes at every price.

Non-Price Determinants of Demand

Factors that can shift demand such as consumer preferences, income, prices of substitutes or complements, number of buyers, and expectations.

Law of Supply

States that as price rises, quantity supplied rises, and as price falls, quantity supplied falls.

Quantity Supplied

The amount of a good or service producers are willing to sell at a specific price.

Shift of the Supply Curve

Occurs when non-price determinants, like input costs or technology, change so that producers' willingness to supply changes at every price.

Equilibrium

The price and quantity at which quantity demanded equals quantity supplied.

Surplus

Occurs when quantity supplied is greater than quantity demanded at a given price.

Shortage

Occurs when quantity demanded is greater than quantity supplied at a given price.

Price Elasticity of Demand

A measure of how responsive quantity demanded is to a change in price.

Inelastic Demand

Demand is inelastic when quantity demanded changes less than the proportional change in price.

Elastic Demand

Demand is elastic when quantity demanded changes more than the proportional change in price.

Deadweight Loss

The loss of economic efficiency that can occur when equilibrium is not achieved.

Biological Time Lags

Delays in production caused by biological processes in animal production.

Market Signals

Signals that indicate the conditions of the market, affecting producer and consumer behavior.

Capacity Constraints

Limitations in the ability of services to be supplied due to time, staffing, and resources.

Substitutes

Products that can replace each other in consumption, affecting price elasticity.

Complements

Products that are consumed together, where the demand for one affects the demand for the other.

Movement Along the Demand Curve

A change in price results in a change in quantity demanded.

Shift of the Supply Curve Left

Occurs when there is a decrease in the supply of a product at every price.

Shift of the Supply Curve Right

Occurs when there is an increase in the supply of a product at every price.

Input Costs

Expenses incurred in the production of a product, which can affect supply.

Expectations of Future Prices

Producers and consumers' anticipations regarding future market prices, which can influence current supply and demand.