Economics Demand and Supply: Key Concepts and Graphs

Chapter 5 Page 71

Demand

Ex: Consumers

Definition: the quantity of a good or service that consumers are both willing and able to buy at various prices

Sentence: The demand for pokemon cards has increased after they stopped producing them.

Connections:

law of demand

Quantity Demand

Chapter 5 Page 71

Quantity Demand

Ex: Dozen eggs

Definition: the specific amount of quantity of a good or service an individual is willing an able to buy at a specific price.

Sentence: The quantity demand is different for everybody.

Connections:

Law of demand

demand

Chapter 5 Page 71

Law of Demand

Ex: BOGO

Definition: an economic law stating that as the price of a good or service increases, the quantity demanded decreases, and vice versa. Generally, consumers are happier to buy goods and services at lower prices than at higher prices.

Sentence: The law of demand says that consumers want to pay lower prices for things.

Connections:

quantity demand

demand

Chapter 5 Page 73

Demand Schedule

Ex: A business testing out different prices.

Definition: A table that shows how many people can and are willing to buy something with a certain price.

Sentence: The demand schedule can help people see the optimal price for something.

Connections:

Demand curve

demand

Chapter 5 Page 73

Demand Curve

Ex: Price of item, quality of item.

Definition: A graph that shows the relationship between the variables in the demand schedule.

Sentence: The demand curve can help show relationship between price and amount of buyers for an object.

Connections:

demand schedule

demand

Chapter 5 Page 74

Market Demand

Ex: All people that need a type of product.

Definition: The sum of all the individual quantities demanded in a market.

Sentence: The market demand for shows the total demand across the market.

Connections:

Demand

law of demand

Chapter 5 Page 75

income Effect

Ex: Someone not being able to buy another dozen eggs because the price has increased.

Definition: People's incomes are limited so they only have so much money to spend. If the price of something increases, they will not be able to buy the same quantity that they could before.

Sentence: The income effect can cause a change in the demand of an output.

Connections:

Revenue

normal good

Chapter 5 Page 75

Substitution Effect

Ex: A cookie and brownie can both fulfill the want of baked goods.

Definition: when two different goods or services can fulfill the same want.

Sentence: A cookie and brownie are an example of the substitution effect if the person is craving something sweet.

Connections:

Substitution good

demand

Chapter 5 Page 76

Change in Demand

Ex: An influencer endorsing a product.

Definition: when the demand for an output is changed and is caused by something unrelated to the price.

Sentence: The change in demand can be caused by a wide variety of things.

Connections:

Demand

Law of demand

Chapter 5 Page 76

Demand Shifters AKA Determinants of Demand

Ex: Price increase/decrease

Definition: Things that caused the demand for an output to change.

Sentence: There are a wide variety of demand shifters.

Connections:

demand

Demand curve

Chapter 5 Page 75

Change in quantity demanded

Ex:

Definition: the change in how much a consumer buys a certain good or service when the price changes.

Sentence: The change in quantity demanded shows how price can affect demand.

Connections:

demand

demand curve

Chapter 5 Page 71

Substitute Good

Definition: A product that satisfies the same basic want as another product. Substitute goods may be used in place of one another.

Sentence: Different soups can be substitute goods or each other.

Connections:

substitute effect

demand

Chapter 5 Page 71

Complementary Good

Definition: A product that is used or consumed jointly with another product. Such a good usually has more value when paired with its complement than when used separately.

Sentence: Complementary goods work well together.

Connections:

demand

change in demand

Chapter 5 Page 78

Independent Good

Definition: as the price of another good changes, it has no affect on the demand of this good, demand does not change since they are not related.

Sentence: Independent goods have no connections with each other.

Connections:

Demand

change in demand

Chapter 5 Page 78

Normal Good

Definition: a good whose demand for it increases as one's income increases.

Sentence: A normal good is affected by the income of the people.

Connections:

Demand

change in demand

Chapter 5 Page 78

Inferior Good

Definition: a good whose demand decreases as one's income increases.

Sentence: An inferior good loses demand when income decreases.

Connections:

demand

change in demand

Chapter 5 Page 78

Neutral Good

Definition: a good whose demand does not change as one's income changes.

Sentence: Neutral goods are unaffected by income changes.

Connections:

demand

change in demand

Chapter 5 Page 71

Supply

Definition: The quantity of a good or service that producers are willing and able to offer for sale at various prices.

Sentence: The supply of a good is determined by the producers.

Connections:

Law of supply

supply schedule

Chapter 5 Page 78

Quantity Supplied

Definition: the amount of a good or service that producers are willing and able to offer for sale at a specific price.

Sentence: The quantity supplied can differ depending at the price being sold at.

Connections:

supply

law of supply

Chapter 5 Page 71

Law of Supply

Definition: An economic law stating that as the price of a good or service, increases, the quantity supplied increases, and vice versa. Generally, producers are happier to offer goods and services at higher prices than at lower prices.

Sentence: The law of supply talks about the relatinship between goods and services and the quantity supplied.

Connections:

supply

supply schedule

Chapter 5 Page 79

Supply Schedule

Definition: a table that shows the quantities supplied at different prices in a market.

Sentence: The supply schedule helps producers determine the amount of a good or service they need.

Connections:

Supply

law of supply

Chapter 5 Page 79

Market Supply

Definition: the sum of all the individual quantities supplied.

Sentence: The market supply gives the total amount of a good or service supplied.

Connections:

supply

supply schedule

Chapter 5 Page 71

Revenue

Definition: The amount of money a firm receives in the course of doing business. Revenue is calculated by multiplying the quantity sold by the price.

Sentence: The revenue of a business can determine how well they are doing.

Connections:

supply

firms

Chapter 5 Page 81

Change in Supply

Definition: when the market supply for a good or service increases or decreases.

Sentence: The change in supply can show how in demand an output is.

Connections:

Supply

law of supply

Chapter 5 Page 81

Change in quantity supplied

Definition: When the quantity of a good or service changes. It is only affected by price.

Sentence: The change in quantity supplied can only be affected by the price of an output.

Connections:

quantity supplied

supply

Chapter 5 Page 82

Supply Shifters or Determinants of Supply

Definition: Factors that can cause a change in supply of a good or service.

Sentence: There are a lot of different supply shifters.

Connections:

supply

change in supply

Chapter 5 Page 83

Subsidy

Definition: a cash payment aimed at helping a producer continue to operate.

Sentence: A subsidy can aid the survival of a business.

Connections:

regulation

market

Chapter 5 Page 83

Regulation

Definition: Rules, laws and guidelines imposed by governments or regulatory bodies to control and manage economic activities.

Sentence: Regulations ensure that firms have good practices.

Connections:

market

subsidy

Chapter 5 Page

Excise tax

Definition: a tax on the manufacture or sale of a good.

Sentence: The excise tax makes the price at the counter more than it appears when you pick the good up.

Connections:

tariffs

sales tax