Supply and Demand Concepts

These flashcards cover key concepts related to supply and demand, opportunity cost, price mechanisms, and elasticity, which are essential for understanding economic principles.

Quantity Supplied

The amount of a good that producers are willing and able to sell at a given price.

ceteris paribus

A Latin phrase meaning 'all other things being equal'; used to isolate the effect of one variable.

Opportunity Cost

The value of the next best alternative that is foregone when a decision is made.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Price Ceiling

A legal maximum price that can be charged for a good or service.

Price Floor

A legal minimum price that must be paid for a good or service.

Comparative Advantage

The ability of a party to produce a good at a lower opportunity cost than another party.

Elastic Demand

Demand is considered elastic when the quantity demanded changes significantly as a result of price changes.

Inelastic Demand

Demand is considered inelastic when the quantity demanded changes very little as a result of price changes.

Marginal Utility

The additional satisfaction gained from consuming one more unit of a good or service.

Supply Curve Shift

A change in the quantity supplied at every price, often caused by external factors like technology or resource costs.

Demand Curve Shift

A change in the quantity demanded at every price due to factors like consumer preferences or incomes.

Surplus

A situation where the quantity supplied exceeds the quantity demanded at a given price.

Shortage

A situation where the quantity demanded exceeds the quantity supplied at a given price.

Non-Price Determinants of Demand

Factors other than price that influence demand, such as income, preferences, and number of buyers.

Non-Price Determinants of Supply

Factors other than price that influence supply, such as production costs, technology, and number of sellers.