AP Micro Unit 2 Terms

Law of Demand

Law of Demand

as the price of good or service increases, quantity demanded decreases, and vice versa

relationship between price and quantity demanded

demand curves

inverse relationship - curve slopes downward

change of price in exact product does not shift curve, only causes movement on existing curve

use demand schedule to create curve

substitute goods

two alternatitve goods that can be used for the same purpose

have opposite demands. as one increases demand, the other decreases

consumers go for cheaper substitute

complement goods

goods that are bought and used together

have joint demand. as one increases demand, the other also increases, and vice versa

Any factor other than _______ will shift the demand curve

price of a product

increase in demand shifts curve to the ______

right

decrease in demand shifts curve to the ____

left

Law of Supply

as the price of a good or service increases, the quantity supplied will also increase, and vice versa

relationship between price and quantity supplied

supply curves

direct relationship - curve slopes upward

change of price in exact product does not shift curve, only causes movement on existing curve

use supply schedule to create curve

Any factor that _______ cost of production decreases overall supply

increases

Any factor that ______ cost of production increases overall supply

decreases

Any factor other than ______ will shift the supply curve

price of the product

increase in supply shifts curve to the _____

right

decrease in supply shifts curve to the ____

left

Determinants of Demand

in notes

Determinants of Supply

in notes