APMirco U2 Vocab

Quantity Demanded

the amount of a good or a service buyers are willing and able to buy at one price at one time

Law Of Demand

The law states that as the price of any good or service increase the quantity will fall and vice versa demand, indirect

Demand

How much of a good or service consumers are willing and able to purchase at each price: it is changed by price of related goods, price expectation, income, number of buyers, and taste and preferences

Supply

How much of a good or service producers are willing and able to supply at every price

Quantity supplied

The amount of a good or service sellers are willing and able to sell at one price

Law of supply

As the price of any good or service increases the quantity will increase and vice versa: supply direct

Equilibrium

Quantity demand equals quantity supplied

Surplus

The excess product when supply is greater than quantity demanded supply>demand

Shortage

Quantity demanded is greater than quantity supplied. price is below market equilibrium. demand>supply

Price Ceiling

Limit placed by government on what the maximum can be charged. Maximum price of something. example: Rent

Price floor

Limit placed by government on what the minimum that can be charged. Minimum price of something. example: Minimum wage

Elasticity of Demand/Supply

How much income/price affects production/consumption

Inelastic

Price does not affect consumption

Unit Elastic

Elasticity equals 1

Total Revenue

Total amount of money received: price x quantity

Consumer Surplus

Benefit consumers receive. They purchase a product for less than a price they were willing to pay

Producer Surplus

Benefit that producers receive. They sell a product for more than they were originally willing to.

Deadweight Loss

The loss of society’s consumers surplus as a result of policies that change prices or quantities

Tax Incidence

Burden of taxation: the percentage of tax that consumers and producers pay