Chapter 3 Demand, Supply & Price Flashcards
demand
the quantity of a good or service that a household or firm chooses to buy at a given price
price
what must be given in exchange for a good or service
demand curve
smooth curve that gives the quantity demanded at each price
market demand curve
gives the total quantity of the good that will be demanded at each price
substitutes
an increase in the price of one good increases the demand for the other
complements
an increase in the price of one good decreases the demand for the other
demographic effects
effects that arise from changes in characteristics of the population, such as age, birthrates, and location
sources of shifts in market demand curves
changes in … income, price of substitute, price of complement, composition of population, tastes or cultural attitudes, information, availability of credit, expectations
supply
the quantity of a good or service that a household or firm would like to sell at a particular price
supply curve
smooth curve that shows the quantity supplied at each price
market supply curve
total quantity that all firms will supply at a given price
sources of shift in market supply curves
change in … price of inputs, technology, natural environment, availability of credit, expectations
equilibrium price
the price at which demand equals supply
equilibrium quantity
the quantity demanded and supplied at the equilibrium price
equilibrium
condition where there are no forces for change
