Demand, Supply, and Market Equilibrium

These flashcards cover key concepts related to demand, supply, market equilibrium, and their influences, as discussed in the economics lecture.

Demand

The quantity of a product that consumers are willing and able to purchase at different prices.

Supply

The quantity of a product that producers are willing and able to offer for sale at different prices.

Market Equilibrium

A situation where the quantity supplied equals the quantity demanded at a particular price.

Excess Demand

A condition where the quantity demanded exceeds the quantity supplied at the current price.

Excess Supply

A condition where the quantity supplied exceeds the quantity demanded at the current price.

Law of Demand

The principle that there is an inverse relationship between price and quantity demanded, ceteris paribus.

Law of Supply

The principle that there is a direct relationship between price and quantity supplied, ceteris paribus.

Quantity Demanded

The total number of units of a product that consumers are willing and able to buy at a given price.

Shift of Demand Curve

A change in demand caused by factors other than the price of the product.

Movement Along Demand Curve

A change in quantity demanded due to a change in the product's price.

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand decreases as consumer income rises.

Substitutes

Products that can replace each other; an increase in the price of one increases the demand for the other.

Complements

Products that are consumed together; a decrease in the price of one increases the demand for the other.

Factors of Production

The inputs used to produce goods and services, including labor, land, and capital.

Input Markets

Markets where firms buy the resources needed to produce goods and services.

Output Markets

Markets where goods and services produced by firms are sold to consumers.

Price Rationing

The process by which prices determine how much of a good or service is distributed.

Demand Curve

A graph that represents the relationship between the price of a good and the quantity demanded.

Supply Curve

A graph that represents the relationship between the price of a good and the quantity supplied.

Market Demand

The total quantity of a good demanded by all consumers in the market.

Market Supply

The total quantity of a good supplied by all producers in the market.

Profit Maximation

The goal of firms to achieve the greatest difference between total revenue and total costs.

Bankruptcy

A legal status of a person or firm that cannot repay the debts it owes to creditors.

Expectations in Demand

How consumer expectations of future prices and income can affect current demand.

Circular Flow Model

A model that illustrates the flow of resources and goods between households and firms.

Factors of Production Types

The categories of inputs used in the production process: land, labor, capital.