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Markets
places where buyers and sellers interact
Quantity Demanded
the total amount of a good or service that consumers are willing to buy
Demand Schedule
a table that shows the quantity demanded of a good or service at different price levels.
Demand Curve
a graph that visually represents how the quantity demanded changes at different prices.
Law of Demand
all else being equal, when the price of a good or service goes up, people buy less of it, and when the price goes down, people buy more of it.
Demand Shifter
a variable that can change the quantity of a good or service demanded at each price
Complement
if a price drop for one good leads to an increase in demand for another (example, eggs and bacon)
Substitute
if a price drop for one good leads to a decrease in demand for another (Netflix replacing cable)
Normal Good
is one for which demand goes up when income increases.
Inferior Good
is one where demand goes down as income increases.
Quantity Supplied
the number of goods or services that suppliers will produce and sell at a given market price.
Supply Schedule
a table that illustrates all the quantities supplied at different prices.
Supply Curve
a graph that illustrates all the quantities supplied at different prices.
Supply Shifter
a variable that can change the quantity of a good or service supplied at each price
Equilibrium Price
the price at which the quantity demand = quantity supplied.
Equilibrium Quantity
quantity demanded and supplied = equilibrium price
Surplus
supply > demand
Shortage
quantity demanded > quantity supplied
Circular Flow Model
a look at how markets work and how they are related to each other.
