Chapter 4 Flashcards
law of demand
Quantity demanded rises as price falls, other things constant.
OR
Quantity demanded falls as price rises, other things constant.
demand curve
the graphic representation of the relationship between price and quantity demanded
demand
a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant
quantity demanded
a specific amount that will be demanded per unit of time at a specific price, other things constant
movement along a demand curve
the graphical representation of the effect of a change in price on the quantity demanded
shift in demand
the graphical representation of the effect of anything other than price on demand
market demand curve
the horizontal sum of all individual demand curves
law of supply
Quantity supplied rises as price rises, other things constant.
OR
Quantity supplied falls as price falls, other things constant.
supply
a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant.
quantity supplied
a specific amount that will be supplied at a specific price
market supply curve
the horizontal sum of all individual supply curves
equilibrium
a concept in which opposing dynamic forces cancel each other out
equilibrium quantity
the amount bought and sold at the equilibrium price
equilibrium price
the price toward which the invisible hand drives the market
the fallacy of composition
the false assumption that what is true for a part will also be true for the whole