Supply, Demand, and Market Equilibrium

Comprehensive vocabulary flashcards covering the concepts of demand, supply, market shifters, and market equilibrium.

Demand

The quantity of a good or service that consumers are willing and able to buy at different prices during a particular period.

Quantity demanded

The specific amount consumers are willing and able to buy at one particular price.

Demand schedule

A table showing the relationship between the price of a good and the quantity demanded.

Demand curve

A graph showing the relationship between price and quantity demanded, with price on the vertical (Y) axis and quantity on the horizontal (X) axis.

Law of demand

The economic principle stating that when price increases, quantity demanded decreases, and when price decreases, quantity demanded increases, all else equal.

Movement along the demand curve

A change in quantity demanded along an existing curve caused solely by a change in the good's own price.

Shift of the demand curve

A change in demand caused by a factor other than the good's own price, shifting the entire curve to the right (increase) or to the left (decrease).

Normal goods

Goods for which consumer demand increases when income rises and decreases when income falls.

Inferior goods

Goods for which demand decreases when consumer income increases because buyers switch to preferred alternatives.

Tastes

Consumers' preferences for particular goods or services, shaped by fashion, fads, and entertainment.

Consumer expectations

Beliefs regarding future prices, income, or availability that influence how much consumers choose to buy in the current period.

Market demand

The total quantity demanded by all consumers in a market at each price, calculated by adding individual quantities demanded at each price.

Substitutes (in demand)

Goods that can replace one another; an increase in the price of one good causes an increase in demand for the substitute good.

Complements (in demand)

Goods that are typically consumed together; an increase in the price of one good leads to a decrease in demand for the complementary good.

Demographics

Characteristics of consumers, such as age and household composition, that influence overall demand for goods and services.

Supply

The quantities of a good or service that producers are willing and able to sell at different prices during a particular period.

Quantity supplied

The specific amount of a good or service that producers are willing and able to sell at one particular price.

Supply schedule

A table showing the relationship between the price of a good and the quantity supplied.

Law of supply

The economic principle stating that as price increases, quantity supplied increases, and as price decreases, quantity supplied decreases, all else equal.

Movement along the supply curve

A change in quantity supplied caused solely by a change in the product's own selling price.

Shift in supply

A change in supply caused by a factor other than the product's own selling price, moving the entire curve to the right (increase) or to the left (decrease).

Inputs

Resources utilized to produce goods or services, including labor, raw materials, equipment, and energy.

Substitutes in production

Alternative goods that producers can manufacture or cultivate using the same limited resources.

Complements in production (joint products)

Two or more distinct goods that are produced together from the same production process.

Technology (in production)

New methods, machines, or processes that alter production efficiency and affect supply.

Producer expectations

Beliefs held by suppliers about future market prices or conditions that alter current supply decisions.

Market supply

The combined total quantity supplied by all producers in a given market at each price.

Tax on production

A mandatory cost imposed by the government on producers that increases production costs and decreases supply.

Subsidy

Financial assistance provided by the government that lowers production costs and increases supply.

Market equilibrium

The market state where the quantity demanded equals the quantity supplied, resulting in no shortage or surplus.

Equilibrium price

The specific price ($P^*$) at which the quantity demanded is equal to the quantity supplied.

Equilibrium quantity

The specific quantity ($Q^*$) bought and sold at the equilibrium price.

Shortage

A condition occurring when quantity demanded exceeds quantity supplied at the current market price, typically when the price is below equilibrium.

Surplus

A condition occurring when quantity supplied exceeds quantity demanded at the current market price, typically when the price is above equilibrium.