2.4 The interactions of demand and supply Flashcards
What is the meaning of market equilibrium?
When the quantity demanded and quantity supplied within a market are equal
What is the meaning of market disequilibrium?
When the quantity demanded and quantity supplied within a market are not equal
What can cause a movement along the demand and supply curves?
A change in the price of the good
What causes a shift in the demand curve?
P A S I F I C
What causes a shift in the supply curve?
C S W I F T
What happens to equilibrium price and quantity when there is a shift to the right of the demand curve?
- Price increases
- Quantity increases
What happens to equilibrium price and quantity when there is a shift to the right of the supply curve?
- Price decreases
- Quantity increases
What does joint demand mean? (Complementary goods)
As the demand for good A increases the demand for good B also increases
What does alternative demand mean? (substitutes)
As the price of good A increases the demand for good B increase
What does derived demand mean?
Many goods are demanded only because they are needed for the production of another good
When is a good in joint supply?
A good is in joint supply with another good when one good is supplied for two different purposes
