Supply And Demand Flashcards
Markets
Markets enable exchange of goods/services by means of directly reciprocated (return in favor) transfers, voluntary entered into for mutual benefit, that is often impersonal
Competitive Market
• Many buyers & Sellers
• Same good / service
What does supply and demand model show
How competitive market works
5 key elements
- Demand Curve
- Supply Curve
- Demand & Supply Curve Shifts
- Market Equilibrium
- Changes in Market Equilibrium
Demand Schedule
How much good/service consumers will want to buy on different prices
Demand Curve
How much good/service consumers will buy at any given price
—-> graph of demand schedule
A shift of Demand Curve
Increase in Demand —> increase in population, etc —-> rise in quantity demanded at any given price
Decrease in Demand —-> decrease in quantity demanded at any given price
Movement along the demand curve
Change in price results change in quantity demanded
Substitutes
A fall in price of 1 makes consumers less willing to buy 2
Complements
Fall in price of makes consumers more willing to vuy the other
Normal Goods
Rise in income increases a demand for good
Inferior Goods
Rise in income decreases demand of the good
Market Demand Curve
Sum of all individual demand curves
Supply Schedule
Shows how much good/service would be supplied at different prices
Supply Curve
Shows graph of how much good/service people are willing to sell at any given price
