Schedule/curve showing various amounts of product that consumers willing + able to buy at several possible prices during a specific period of time
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Demand schedule
Illustrates quantity demanded of a good or service at different prices
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3
Law of demand
Other things equal, as price falls, the quantity demanded rises (and vice versa)
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4
Diminishing marginal utility
Each successive unit of product consumed → Buyers get less satisfaction
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5
Income effect
Lower price increases purchasing power of income → Buyer can purchase more of product than before (and vice versa)
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6
Substitution effect
Buyer has incentive to substitute less expensive products for similar products that are relatively more expensive
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7
Demand curve
Quantity demanded on horizontal axis, price on vertical axis; downward slope reflects law of demand
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8
Determinants of demand
Other factors besides price that affect purchases; shifts the demand curve
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9
Normal goods
Rise in income causes increase in demand
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10
Inferior goods
Rise in income causes decrease in demand
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11
Substitute goods
Increase in price of one related good → Demand for other good increases
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12
Complementary goods
Increase in price of one related good → Demand for other good decreases
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13
Change in demand
Shift of demand curve to right/left
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14
Change in quantity demanded
Movement from one point to another on a fixed demand curve
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15
Supply
Schedule/curve showing various amounts of product that producers are willing + able to make available for sale at several possible prices during a specific period of time
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16
Supply schedule
Illustrates quantity supplied of a good or service at different prices
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17
Law of supply
Other things equal, as price rises, the quantity supplied rises (and vice versa)
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18
Supply curve
Upward sloping; reflects law of supply
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19
Determinants of supply
Other factors besides price that affect supply; shifts supply curve
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20
Change in supply
Shift of supply curve to right/left
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21
Change in quantity supplied
Movement from one point to another on a fixed supply curve
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22
Equilibrium price
Price where quantity demanded = quantity supplied
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23
Equilibrium quantity
Quantity demanded and quantity supplied at the equilibrium price
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24
Surplus
Quantity supplied exceeds quantity demanded; drives prices down
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25
Shortage
Quantity demanded exceeds quantity supplied; drives prices up
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26
Productive efficiency
Production of a good in the least-costly way
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27
Allocative efficiency
Production of the particular mix of goods and services most highly valued by society
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28
Price ceiling
Maximum legal price a seller can charge for a good or service
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29
Price floor
Minimum legal price a seller can charge for a good or service
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Note 
Flashcard (34)