Chapter 3- Supply And Demand Flashcards
Competitive Market
Market in which there are many buyers and sellers of same good/service so that no one firm’s actions can affect the price.
Demand Schedule
Table showing how much of good/service ppl will want to buy at different prices.
Quantity Demanded (Qd)
Actual amount consumers are willing to buy at a specific price
Demand Curve
Graphical representation of demand schedule, shows relationship between price and quantity demanded
- slopes downward
- inverse relationship between price and Qd
Shift in Demand Curve
Change in quantity demanded at any price
Movement Along Demand Curve
Changes in quantity demanded due to change in good’s price
What cause shifts in Demand Curve
- changes in price of related goods
- changes in income
- changes in preferences
- changes in expectations
- changes in number of consumers
Substitutes
Rise of price in one good leads to increased demand for the other
-because of similar function
Complements
Rise in price of one leads to decrease in demand for the other
-goods typically consumed together
Normal Goods
Goods for which demand increases when income levels rise
-ex/ taxi, Whole Foods
Inferior Goods
Goods for which demand decreases when income levels rise
-ex/ bus ride and fast food
Quantity Supplied (Qs)
Actual amount of a good/service ppl are willing to sell at some specific price
Causes For Shifts in Supply Curve
1) changes in input prices
2) changes in price of related goods/services
3) changes in technology
4) changes in expectations
5) change in number of producers
Input
Any good/service that is used to produce another good/service
-pg. 84, all possible shifts
Surplus
Excess supply
