demand Flashcards
what is a market
something that brings buyers and sellers together
demand
the amount of a good or service buyers are willing and able to purchase
demand schedule
is a table that lists the quantity of a good that consumers in a market will buy at a given price
demand curve
a graph that shows the quantity demanded at a given price
market demand
is the sum of quantities demanded by all consumers in a market
law of demand
an increase in price will cause a decrease in quantity demanded and vice versa
the law of diminishing the marginal utility
why the demand curve is downward sloping
- each additional unit of a good or service that is consumed brings less satisfaction
demand determinants (changes in demand)
- the number of buyers in the market
- income (normal products- income increase causes a rightward shift but causes a leftward shift for inferior products such as second-hand goods)
- price of other products
- consumer preferences (a new trend)
- consumer expectations (if they expect a price to go down for a specific item)
difference between a substitute and complementary products
both fall under the determinant for the price of products,
however:
substitute products: products that can be substituted for another, example butter and margarine
complementary products: products that go hand in hand, example printers and ink
supply
willing to sell at various prices
supply schedule and supply curve
same as demand schedule and demand curve, however, a supply curve moves from bottom left to top right
law of supply
an increase in price will increase the quantity supplied (Qs) and vice versa
supply determinants
- the number of producers
- resource prices
- improvement/disimprovement in technology
- changes in nature
- prices of related products
- producer expectations
equilibrium
the point where supply curve and demand curve intersetc
surplus
there is excess supply and price is pushed down
shortage
there is excess demand and price is pushed up
changes in equilibrium
the rightward shift in demand curve pushes up both equilibrium price and quantity
the leftward shift in demand curve pushes down both equilibrium price and quantity
the rightward shift in supply curve pushes equilibrium price down and equilibrium quantity up
the leftward shift in supply curve pushes equilibrium price up and equilibrium quantity down
