demand supply and market equilibrium Flashcards
what is the law of demand
inverse relationship between price and quantity demanded (price goes up quantity goes down) OTHER THINGS BEING EQUAL
endogenous variables
the price and the demand are endogenous
exogenous variables
stuff like price of substitutes price of complement goods consumer income consumer expectations consumer perspective number of people in the market
ceteris paribus
other things equal
demand slope
negative downwards
movement along the demand curve
endogenous change probably change in quantity demanded or price
shift in the curve
this occurs because of exogenous variables
what is the relation of supply and increase in price
it is a positive relationship cuz when price goes up supply goes up
supply curve
curve goes up slope is positive
quantity supplied vs supply
quantity supplied is just for a specific price and quantity
supply covers all prices and quantities in the market quantity supplied is endogenous
what is equilibrium
the intersection of supply and demand (the point where most people are happy) majority of people are staticified at this point and don’t want to change it
what is a market
a place where goods are exchanged between buyers and sellers
math equilibrium
make supply equal to demand and solve then input the answer into one of the original equations to get the second variable
how to find equilibrium at a new price
just input the new values then after subtract the new number from the old one obv use common sense if the price goes down for the new one then the number should be negative
complements
price and demand are inverse ( price goes down demand will go up)
