Supply And Demand Flashcards
Complements?
Products that are used together, so the increase or decrease in demand will result in an increase or decrease in demand for the other
Demand?
Willingness to buy a good or service and the ability to pay for it.
Demand curve?
A graphic that displays data from the demand schedule,
Demand schedule?
A listing of how much of an item an individual is willing to purchase at each price.
Equilibrium price?
Price at which the quantity demanded and quantity supplied are equal
Fixed cost?
Cost that owners incur no matter how much they produce
Law of demand?
Prices decrease-quantity demanded increases.
Price increase- quantity demanded decreases.
Law of supply?
Price falls-quantity supplied falls
Price rises-quantity supplied rises
Marginal cost?
Extra cost of producing one more unit
Marginal product?
Change in total output that results from adding one more worker
Price ceiling?
Legal maximum price that sellers may charge for a product
Price floor?
Legal minimum price that buyers may pay for a product
Profit?
Total revenue-total cost
Profit maximizing output?
Level of production at which a business realizes the greatest amount of profit
Regulation?
A set of rules or laws designed to control business behavior
Substitutes?
Products that can be used in place of other products to satisfy consumer wants
Supply?
Willingness and ability of producers to offer goods and services for sale
Supply curve?
A graphic that displays the supply schedule
Supply schedule?
Lists how much of a good or service a producer is willing to offer at each price
Surplus?
Result of quantity supplied being greater than quantity demanded
Shortage?
The result of quantity demanded being greater than quantity supplied
Total cost?
Sum of the fixed and variable costs
Total revenue?
A company’s income from selling its products
Variable costs?
Depend on the level of production output
Change in demand?
Occurs when something prompts producers to sell different amounts at every price
Change in supply?
Occur when something prompts producers to sell different amounts at every price
How is revenue calculated?
Price of each unit • number of units sold
What factors affect demand? (7)
Price, income, market size, consumer taste, consumer expectations, substitutes, and complements
What factors affect supply? (7)
Input costs, labor productivity, technology, government action: taxes or regulations, producer expectations, and number of producers
How do business owners decide on the right number of workers?
Profit maximizing output
How does a business calculate total profit?
Total revenue-total cost
What motivates producers ti increase supple?
Profit
What do lower prices encourage?
Consumers to buy
What does a surplus indicate?
Decrease in price
What does a shortage indicate?
Increase in price
When customers demand more goods and services at every price, what will happen to the equilibrium?
It will rise
