Ch 12 Market Economy

Individual demand

Quantity demanded of a good or service by individual consumer at different prices

Market demand

Total quantity of a good or service that woudl be demanded by all consumers in a market at different prices

Derived demand

Regret to the FOP, demand of a good for its production of other goods

Composite demand

When good have more than once use.

Joint demand

Goods bought and sold together

Effective demand

Demand supported by the necessary purchasing power.

Exceptions to law of demand

Snob goods, Giffen goods, Good for which demand is affected by expeactions

Factors that cause shift of demand curve

Change in income, price of substitutes, price of compliments, availability of credit

Exceptions to law of supply

Supply is fixed, supplier is operating close to max capacity

Factor that fuse a shift of the supply curve

Cost in production, price of related good and services, unplanned factors, govt subsidies,

Market

Is a place here buyers and sellers come together

Equilibrium price

Price that ensures everything that is supplied is demanded.

Consumer surplus

Is the difference between what a consumer actually pays for a good or service and what they would be willing to pay

Producer surplus

Difference between the price the seller would have accepted for a good or service and the price the seller recives