econ 29th nov (demand and supply chapter 2.3-2.4) Flashcards
What is supply?
the willingness and ability to sell a product
What is demand
The willingness and ability to buy a product
Market supply
total supply of a product
Difference between individual and market demand
Individual demand is the demand of one person for a product.
Market demand is the sum of all the individual demand for a product at every price (total demand for a product)
Extension in supply
a rise in the quantity supplied caused by a rise in the price of the product itself
Law of demand
The relationship between price and quantity demanded is inversely proportional. As the price of a good rises, the quantity demanded will usually fall, ceteris paribus (vice versa: as the prices of a good falls, the quantity of demand will usually rise, all things being equal)
Contraction in supply
a fall in the quantity supplied caused by a fall in the price of the product itself
Changes in supply
changes in supply conditions causing shifts in the supply curve
Increase in supply
a rise in supply at any given price, causing the supply curve to shift to the right
What is the relationship between price & quantity demanded
inverse
Decrease in supply
a fall in supply at any given price, causing the supply curve to shift to the left
what does higher price equal (demand)
lower quantity demanded
Unit cost
the average cost of production, it is found by dividing total cost by output
what does a demand graph look like
price is measured on the vertical axis and quantity demanded on the horizontal
Aggregation
the addition of individual components to arrive at a total amount.
What causes a change in quantity demanded?
A change in the price of the product.
How is a change in quantity demanded represented on a demand curve?
By a movement along the same demand curve.
What happens to the quantity demanded when the price of a product increases?
The quantity demanded decreases.
What happens to the quantity demanded when the price of a product decreases?
The quantity demanded increases.
Does a change in quantity demanded shift the demand curve?
No, it only causes movement along the curve.
When does the entire demand curve shift?
When there is an overall change in demand
What happens during a change in demand?
The entire demand curve shifts due to a factor other than price.
What is the technical term for factors that cause a change in demand?
Non-price determinants of demand.