economics

Demand

The amount of some product that a consumer is willing and able to purchase at each price

Law of Demand

Law that states that the quantity demanded of a good or service varies according to price

Individual Demand Schedule/Curve

A listing that shows various quantities of demanded of a particular product at prices

Market Demand Schedule/Curve

Illustrates the quantities and prices that all producers will offer in the market for any given product or service

Diminishing Marginal Utility

The extra satisfaction we get from using additional quantities of the product begins to diminish

Change in Quantity Demanded vs. Change in Demand

Change in the amount of a product purchased when there is a price change vs. the quantity that a person will demand varies depending on the price of a good or service

Income Effect

A change in quantity demand because a change in price alters consumers' real income

Substitution Effect

Concept used to describe that as prices rise consumers will replace more expensive items with less costly alternatives

Factors causing a change in demand

Consumer income, consumer tastes, substitutes, complements, change in expectations, and change in the number of consumers

Demand Elasticity/Determinant of Demand Elasticity

Elastic Demand Curve

A small change in the price that causes a relatively large change in the quantity demanded

Inelastic Demand Curve

A change in prices causes a relatively small change in quantity demanded

Supply

Quantities that would be offered for sale at all possible prices that could prevail in the market

The Law of Supply

Principle that states that the quantity supplied or offered for sale, varies directly with its price

Individual Supply Schedule/Curve

Illustrates how the quantity that a producer makes varies depending on the price that will prevail in the market

Market Supply Schedule/Curve

Illustrates the quantities and prices that all producers will offer in the market for any given product or service

Change in Quantity Supplied vs. Change in Supply

A change in quantity supplied reflects a move along a supply curve as price changes

Factors that cause a change in supply

Changes in production costs, number of competitors, and technology

Supply Elasticity (Horizontal)

A measure of the way in which a quantity supplied responds to a change in price

Elastic Supply Curve

The quantity demanded or supplied responds to price changes in a greater than proportional manner

Inelastic Supply Curve

The quantity of a good when its price changes

Determinants of Supply Elasticity

The more easily sellers can change the quantity they produce, the greater the price elasticity of supply

Price

The amount of money exchanged for a good or service

Surplus

Quantity supplied exceeds quantity demanded

Shortage

Quantity demanded exceeds quantity supplied

Equilibrium Price

Quantity supplied equals quantity demanded