Chapter 3 (Supply and Demand) Flashcards
ceteris paribus
other things being equal
Complements
goods that are often used together so that consumption of one good tends to enhance consumption of the other
Consumer Surpluss
the extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
Demand
the relationship between price and the quantity demanded of a certain good or service
Demand Curve
a graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on the horizontal axis and the price on the vertical axis
Demand Schedule
a table that shows a range of prices for a certain good or service and the quantity demanded at each price
Equilibrium Price
the price where quantity demanded is equal to quantity supplied
Equilibrium Quantity
the quantity at which quantity demanded and quantity supplied are equal for a certain price level
Excess Demand
at the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage
Excess Supply
at the existing price, quantity supplied exceeds the quantity demanded; also called a surplus
Inferior Good
a good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls
Law of Demand
the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant
Law of Supply
the common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied, while all other variables are held constant
Normal Good
a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls
Price Control
Government laws to regulate prices instead of letting market forces determine prices
Producer Surpluss
the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept
Quantity Demanded
the total number of units of a good or service consumers are willing to purchase at a given price
Quantity Supplied
the total number of units of a good or service producers are willing to sell at a given price
Shift in Demand
when a change in some economic factor (other than price) causes a different quantity to be demanded at every price
Shift in Supply
when a change in some economic factor (other than price) causes a different quantity to be supplied at every price
Shortage
at the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand
Social Surplus
the sum of consumer surplus and producer surplus
Substitute
a good that can replace another to some extent, so that greater consumption of one good can mean less of the
other
Supply
the relationship between price and the quantity supplied of a certain good or service
