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37 Terms
1
Shortage
________- a situation in which quantity demanded is greater than quantity supplied.
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2
Surplus
________- a situation in which quantity supplied is greater than quantity demanded.
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3
Supply schedule
________- a table that shows the relationship between the price of a good and the quantity supplied.
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4
supply demand model
The ________ is a tool that is used to understand the factors that influence the price and quantity of a good and why those prices and quantities change over time.
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5
Law of supply
________ and demand- the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.
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6
A→B price decrease
________ leads to increase in quantity demanded.
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7
B→ a price increase
________ leads to decreases in quantity demanded.
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8
Supply
the quantity of a good and/or service that producers are willing and able to offer for sale at each possible price during a certain time period
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9
Demand
the quantity of a good or service that buyers are willing to and able to buy at all possible prices during a certain time period
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10
Law of demand
as the price of a good increases, the quantity demand of that good decreases
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11
Normal good
demand increases when income increases
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12
Inferior good
demand decreases when income increases
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13
Substitute
two goods are substitutes, a decrease in the price of one leads to a decrease in demand for another
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14
complements
two goods are complements a decrease in the price of one good leads to an increase in the demand for the other
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15
Law of demand
as the price of a increases the quantity demanded of the that good decreases
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16
The Demand Curve
The Relationship between Price and Quantity Demanded
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17
Law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
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18
Demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
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19
Demand curve
a graph of the relationship between the price of a good and the quantity demanded
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20
Market demand
the sum of all individual demands for a particular good or service
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21
Increase in demand
any change that increases the quantity demanded at every price and shifts the demand curve to the right
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22
Decrease in demand
any change that reduces the quantity demanded at every price and shifts the demand curve to the left
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23
The Supply Curve
The Relationship between Price and Quantity Supplied
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24
Quantity supplied
the amount of a good that sellers are willing and able to sell
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25
Law of supply
the claim that other things equal, the quantity supplied of a good rise when the price of the good rises
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26
Supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
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27
Supply curve
a graph of the relationship between the price of a good and the quantity supplied
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28
Market supply
the sum of the supplies of all sellers
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29
Equilibrium
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
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30
Equilibrium price
the price that balances quantity supplied and quantity demanded
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31
Equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
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32
Surplus
a situation in which quantity supplied is greater than quantity demanded
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33
Shortage
a situation in which quantity demanded is greater than quantity supplied
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34
perfect complements that must be consumed in fixed proportions
If the sign of XED (cross point equilibrium) is negative ( -\infty−∞minus, infinity) and the elasticity of the goods are perfectly elastic
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35
complementary goods
If the sign of XED (cross point equilibrium) is negative ( -\infty−∞minus, infinity) and the elasticity of the goods are elastic
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36
substitutable goods
If the sign of XED (cross point equilibrium) is positive
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37
Unrelated goods
If the result of XED(cross point equilibrium) is 0
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