ECON 101 - Chapter 3 Flashcards

Demand Schedule

A table that shows the relationship between the price of a product and the quantity of the product demanded.

Demand Curve

A curve that shows the relationship between the price of a product and the quantity of the product demanded.

Law of Demand

The rule that when the price of a product falls, the quantity demanded will increase; when the price rises, the quantity demanded will decrease.

Substitution Effect

The change in the quantity demanded of a good due to a change in price, affecting its relative expense compared to substitutes.

Income Effect

The change in the quantity demanded resulting from the effect of a change in a good's price on consumers' purchasing power.

Ceteris Paribus Condition

The assumption that other variables must be held constant when analyzing the relationship between two specific variables, like price and quantity.

Normal Good

A good for which demand increases as income rises and decreases as income falls.

Inferior Good

A good for which demand increases as income falls and decreases as income rises.

Market Equilibrium

A situation where quantity demanded equals quantity supplied.

Surplus

A condition where the quantity supplied is greater than the quantity demanded.

Shortage

A condition where the quantity demanded is greater than the quantity supplied.

Supply Schedule

A table that shows the relationship between the price of a product and the quantity of the product supplied.

Supply Curve

A curve that shows the relationship between the price of a product and the quantity of the product supplied.

Law of Supply

The rule stating that increases in price cause increases in quantity supplied, and decreases in price cause decreases in quantity supplied.

Price of Inputs

A variable that can shift the supply curve, referring to changes in the cost of resources used in production.

Technological Change

A development that can positively or negatively affect a firm's ability to produce output with a given quantity of inputs.

Market Demand

The demand by all consumers for a given good or service.

Equilibrium Price

The price at which the quantity of energy drinks demanded equals the quantity supplied.

Variables That Shift Market Supply

Factors including the price of inputs, technological changes, and the number of firms in the market that can affect supply.