. Flashcards
1
Q
What is Demand?
A
The quantity of a good or service that consumers are willing and able to buy at different prices, ceteris paribus.
2
Q
What is the Law of Demand?
A
As price falls, quantity demanded increases, and vice versa (inverse relationship).
3
Q
What is Supply?
A
The quantity of a good or service that producers are willing and able to sell at different prices, ceteris paribus.
4
Q
What is the Law of Supply?
A
As price rises, quantity supplied increases, and vice versa (direct relationship).
5
Q
What are Equilibrium Price & Quantity?
A
The price at which quantity demanded equals quantity supplied.
6
Q
What are two factors that shift Demand?
A
- Change in income (normal vs. inferior goods)
- Price of substitutes or complements
7
Q
What are two factors that shift Supply?
A
- Cost of production (wages, raw materials)
- Technology improvements
