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Demand
the willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period
Law of demand
consumers will buy more of a good when its price is lower and less when its price is higher
Change in demand
A shift in demand means that at every price, consumers buy a different quantity than before. (ex. changes in income, consumer expectations, population/number of buyers in a market, consumer tastes/preferences, and the prices of related goods)
Normal Good
a good for which the demand rises as income rises and demand falls as income falls
Inferior good
a good for which the demand falls as income rises and rises as income falls
Neutral good
A good for which the demand remains unchanged as income rises or falls
Substitute
a similar good. The price of one good and the demand for the other move in the same direction
Compliment
a good that is consumed jointly with another good. The price of one and the demand for the other move in opposite directions
Supply
the amount of a good or service that is available
law of supply
producers offer more of a good or service as its price increases and less as its price falls
Quantity supplied
the amount of a good or service that a producer is willing and able to supply at a specific price
Change in Supply
factors that can cause an increase or decrease in supply, at all price levels (ex. changes in resource costs - includes weather, changes in technology, actions by government like taxes, future price expectations, and the number of competitors (sellers) in a market.)
Subsidy
a government payment that supports a business or market
Excise taxes
a tax on the production or sale of a good
Equilibrium
the point at which the demand for a product or service is equal to the supply of that product or service
Shortage
a situation in which consumers want more of a good or service than producers are willing to make available at a particular price
Surplus
when quantity supplied is more than quantity demanded
price ceiling
a maximum price that can legally be charged for a good or service
price floor
a minimum price for a good or service
Barter
the direct exchange of one set of goods or services for another
Rationing
a system of allocating scarce goods and services using criteria other than price
