Supply and Demand Flashcards
Willingness of sellers to produce and sell a good at various possible prices.
Supply
The price and quantity supplied have a direct relationship.
Law of Supply
If the price of a good is high, the quantity supplied or the amount that producers are willing to sell will also be high.
Law of Supply
a graphic representation of the relationship between price and quantity supplied
Supply Curve
The price appears on the vertical axis, while the quantity supplied appears on the horizontal axis.
Supply Curve
a table that shows the relationship between the price of a good and the quantity supplied
Supply schedule
factors that influence supply: the higher the number of sellers in the market, the more supply of products will be available
change in the number of sellers
Factors that Influence Supply: cost of production refers to the prices of all resources needed to manufacture a product. The higher the cost, the lower the quantity supplied
change in cost of production
Factors that Influence Supply: the use of machinery and other equipment leads to a faster way of producing goods, thus, yielding a higher output
change in technology
Factors that Influence Supply: different government policies affect changes in supply
Change in the government policies
Willingness of the buyer or consumer to pay for a certain good
Demand
The price and quantity demanded have an indirect relationship
Law of Demand
If the price of a good is high, the quantity demanded will be low
Law of Demand
a graphic representation of the relationship between price and quantity demanded
Demand Curve
The price appears on the vertical axis, while the quantity demanded appears on the horizontal axis.
Demand curve
a table that shows the relationship between the price of a good and the quantity demanded
Demand schedule
Factors that Influence Demand: a consumer will buy more goods when there is an increase in income
Change in Income
Factors that Influence Demand: population growth means an increase in the size of the market demand, and a decline in population means a decrease in demand
Change in the size of population
Factors that Influence Demand: a good for which consumers’ tastes and preferences are greater, its demand would be large
Change in tastes and preferences
Factors that Influence Demand: if a buyer assumes the price of a good will increase in the future, the demand for that good today increases
Change in the consumers’ speculations
Refers to a price at which both parties producers and consumers are agreed to exchange.
Market equilibrium
A condition of _______ is reached when the quantity of supply and demand are balanced or equal at a given price level.
equilibrium
The equilibrium condition may be illustrated by combining the _______.
demand and supply
Formula for Quantity Supplied (Qs)
Qs = c + dP; where P is price, and c is constant
Formula for Quantity Demanded (Qd)
Qd = a – bP; where P is price, and a is constant
Formula to solve for the equilibrium
Qs = Qd
c + dP = a - bP
Sometimes, the government sets a price floor or a price ceiling. This intervention could bring about _______ or _______.
surplus or shortage
Experienced when the price of a good is above the equilibrium point.
Surplus
This means the quantity supplied exceeds the quantity demanded. (Qs > Qd)
Surplus
Experienced when the price of a good is below the equilibrium point.
Shortage
This means that the quantity demanded exceeds quantity supplied. (Qd > Qs)
Shortage
