Demand and Supply Model

These flashcards cover key vocabulary and concepts from the demand and supply model, focusing on definitions, laws, and market characteristics.

Demand

The relationship between price and quantity demanded of a particular good, other things equal.

Law of Demand

When the price of a good rises, the quantity demanded falls; when the price falls, the quantity demanded rises.

Demand Curve

A graph that illustrates how the quantity demanded of a good changes as its price varies.

Shift in Demand

A change in the demand curve that occurs when there is an increase or decrease in quantity demanded at every price.

Factors that Shift Demand

Variables such as number of buyers, income, prices of related goods, tastes, and expectations that can shift the demand curve.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, identical goods, and no barriers to entry.

Market Demand

The sum of individual demands in a market at each price level.

Equilibrium Price

The price at which the quantity demanded equals the quantity supplied.

Normal Good

A good for which demand increases as consumer income rises.

Inferior Good

A good for which demand decreases as consumer income rises.