Section 2 Flashcards
Competitive Markets
places or mechanisms that bring buyers and sellers together (for mutual gain)
Supply and Demand Model
Demand
schedule or curve that shows how much of something consumers are willing and able to buy at each of a series of prices
Law of Demand
as price falls, quantity demanded rises and as price rises, quantity demanded falls
Demand Schedule
Quantity Demanded
Demand Curve
Factors that Shift Demand (D-Shifters)
- Tastes
- # of buyers in the market
- Income
- Price of Related Goods
- Consumer expectations of future prices and incomes
Change in Demand (Dynamic) vs. Movement Along the Demand Curve (Static)
Change in demand - a shift in the demand curve. Caused by the determinants of demand.
Change in quantity demanded - movement based on price on a fixed demand curve.
Substitutes vs. Complements
Individual Demand Curve
Normal Goods
Inferior Goods
Supply
Schedule or curve showing the amounts of a product that producers are willing and able to sell at each of a series of prices
Law of Supply
As price rises, the quantity supplied rises, as price falls, the quantity supplied falls
Quantity Supplied
Supply Schedule
Supply Curve
Factors that Shift Supply (S-Shifters)
- Resource prices (or input prices) *Factors of Production
- Technology
- Business Taxes and subsidies
- Prices of related goods
- Expectations of future profits
- # of sellers in the market
Change in Supply (Dynamic) vs. Movement Along the Supply Curve (Static)
Inputs (Factors of Production [or resources], such as Land, Labor, and Capital)
Individual Supply Curve
Equilibrium
Supply=Demand
Equilibrium Price (AKA: Market Clearing Price)
