Demand and Supply in Microeconomics

Flashcards for Introductory Microeconomics focusing on Demand and Supply concepts.

Market

Where buyers and sellers trade a particular good/service.

Market Transactions

Buyers decide to transact by considering marginal benefits and marginal costs; trade occurs when MB ≥ MC for both buyers and sellers.

Perfectly Competitive Markets

Markets with many buyers and sellers trading identical goods, where individual sellers do not have market power and are price-takers.

Demand Curve

Maps out the number of units that would be demanded by buyers in the market at each price.

Law of Demand

Price and quantity demanded are inversely related, other things being equal.

Normal Good

A good for which income and demand are positively related.

Inferior Good

A good for which income and demand are inversely related.

Substitutes

Goods for which the price of one good is positively related to the demand for the other good.

Complements

Goods for which the price of one good is inversely related to the demand for the other good.

Market Supply

Market supply comprises the sum of supplies from all sellers.

Law of Supply

Price and quantity supplied are positively related, other things being equal.

Market Equilibrium

Describes a situation in which demand and supply have been brought into balance.

Quantity Demanded (Supplied)

Represents the willingness and ability of buyers (sellers) to buy (sell) at each price.