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These flashcards cover key vocabulary related to macroeconomics concepts of demand, supply, market equilibrium, and government interventions.
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Demand
A schedule or curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during specified periods of time.
Law of Demand
States that other things equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls.
Determinants of Demand
Factors that cause the demand curve to shift, including changes in consumer tastes, number of buyers, income, prices of related goods, and consumer expectations.
Supply
A schedule or curve that shows the various amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specified period of time.
Law of Supply
States that other things equal, as the price rises, the quantity supplied rises, and as the price falls, the quantity supplied falls.
Market Equilibrium
Occurs where the demand curve and supply curve intersect, determining the equilibrium price and quantity.
Price Ceiling
A government-set price limit below which a product may not be sold, often leading to shortages.
Price Floor
A government-set minimum price above the market price, leading to chronic surpluses.
Efficient Allocation
Producing the right mix of goods that is most highly valued by society, achievable through productive and allocative efficiency.
Substitute Goods
Goods that can replace each other; an increase in the price of one leads to an increase in demand for the other.
Complementary Goods
Goods that are used together; a decrease in the price of one leads to an increase in demand for the other.
Shortage
A situation where demand exceeds supply at a given price.
Surplus
A situation where supply exceeds demand at a given price.
Marginal Utility
The additional satisfaction received from consuming one more unit of a product.
Rationing Function of Prices
The ability of the forces of demand and supply to establish a price at which buying and selling decisions are consistent.
Change in Consumer Tastes
A determinant of demand where shifts in preferences can increase or decrease the demand for certain products.
Market Demand
The total quantity of goods demanded by all consumers in a market at various prices.
Individual Demand
The quantity of a product that a single consumer is willing and able to purchase at various prices.