Economic Principles of Supply and Demand

These flashcards cover key vocabulary related to the principles of supply and demand, including definitions of important terms and concepts necessary for understanding market dynamics.

Demand Schedule

A table that shows the relationship between the price of a good and the quantity demanded by consumers.

Supply Schedule

A table that shows the relationship between the price of a good and the quantity supplied by sellers.

Law of Demand

States that the quantity demanded of a good falls when the price rises.

Quantity Demanded

The amount of a good that buyers are willing and able to purchase at a given price.

Demand Curve

A graphical representation of the relationship between price and quantity demanded.

Quantity Supplied

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

Law of Supply

Indicates that the quantity supplied of a good rises when the price rises.

Equilibrium

The point where demand and supply meet, resulting in a stable market for a good.

Excess Demand

Occurs when quantity demanded is greater than quantity supplied at a given price.

Excess Supply

Occurs when quantity supplied exceeds quantity demanded at a given price.

Price Ceiling

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

Price Floor

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

Minimum Wage

The lowest remuneration that employers can legally pay their workers.

Change in Demand

A shift in the demand curve caused by factors such as consumer preferences, income changes, or prices of related goods.

Change in Supply

A shift in the supply curve caused by factors such as production costs, technology, or number of suppliers.

Supply Shock

A sudden shortage of a good or service in the market.