Economics: Demand, Supply, and Market Equilibrium Concepts

American Economics - Mr. Geisel (12th gr.)

Adam Smith

An 18th-century Scottish economist and philosopher known as the father of modern economics, best known for his book 'The Wealth of Nations'.

John Maynard Keynes

A British economist whose ideas, known as Keynesian economics, advocate for government intervention to stabilize economic cycles.

Friedrich Hayek

An Austrian-British economist and philosopher known for his defense of classical liberalism and free-market capitalism.

Demand

The desire for a good or service backed by the ability to pay for it.

Supply

The total amount of a good or service that producers are willing and able to sell at a given price.

Law of Demand

The principle that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.

Law of Supply

The principle that, all else being equal, as the price of a good increases, the quantity supplied increases, and vice versa.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in price.

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand decreases as consumer income rises.

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 often consumed together; an increase in the price of one leads to a decrease in demand for the other.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good and the actual price they receive.

Market Clearing Price

The price at which the quantity supplied equals the quantity demanded, resulting in no surplus or shortage.

Price Floor

A minimum price set by the government that must be paid for a good or service.

Price Ceiling

A maximum price set by the government that can be charged for a good or service.

Shortage

A situation where the quantity demanded exceeds the quantity supplied at a given price.

Surplus

A situation where the quantity supplied exceeds the quantity demanded at a given price.