Supply & Demand Economics

A set of flashcards covering key terms and concepts related to supply and demand in economics.

Economics

The study of how people use their limited resources to satisfy unlimited wants.

Scarcity

Limited resources that necessitate choices and trade-offs.

Opportunity Cost

The most desirable alternative foregone when a choice is made.

Economic System

A system that determines how to allocate resources to satisfy needs and wants.

Demand

The amount of a good or service consumers are willing and able to buy at a given price.

Law of Demand

As price decreases, quantity demanded increases, and vice versa.

Supply

The amount of a good or service that businesses are willing and able to provide at a given price.

Law of Supply

As price increases, quantity supplied increases, and vice versa.

Equilibrium

The point where the quantity demanded equals the quantity supplied at a specific price.

Surplus

A situation where quantity supplied exceeds quantity demanded.

Shortage

A situation where quantity demanded exceeds quantity supplied.

Factors affecting Demand

Income changes, preferences, number of buyers, future price expectations, prices of related goods.

Factors affecting Supply

Resource prices, technology, laws and government restrictions, number of sellers, future price expectations, weather.

Free Enterprise

An economic system where individuals are free to make their own decisions regarding the production and distribution of goods.

Socialism/Command Economy

An economic system in which the government makes all economic decisions.

Mixed Economy

An economic system that combines elements of both free enterprise and government control.

Demand Curve Shift

When a change in demand occurs, causing the entire demand curve to shift left or right.

Supply Curve Shift

When a change in supply occurs, causing the entire supply curve to shift left or right.