Supply and Market Equilibrium

These flashcards cover important vocabulary and concepts related to supply and market equilibrium, including definitions of key terms and principles.

Supply

The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period.

Law of Supply

As the price of a good rises, the quantity supplied of the good rises, and as the price falls, the quantity supplied falls, ceteris paribus.

Supply Curve

The graphical representation of the law of supply, showing the direct relationship between price and quantity supplied.

Change in Quantity Supplied

Refers to a movement along a supply curve caused solely by a change in the price of the good.

Shift of the Supply Curve

Occurs when a change in factors such as prices of relevant resources, technology, number of sellers, expectations, taxes, and government restrictions affects supply.

Market Equilibrium

The price quantity combination where there is no tendency for buyers or sellers to move away; represented by the intersection of the supply and demand curves.

Surplus

A condition where quantity supplied is greater than quantity demanded, occurring at prices above the equilibrium price.

Shortage

A condition where quantity demanded is greater than quantity supplied, occurring at prices below the equilibrium price.

Equilibrium Price

The price at which quantity demanded equals quantity supplied.

Price Controls

Government mandates that restrict the price of goods, including price ceilings (maximum price) and price floors (minimum price).