Supply and Demand (Chap 2, perloff) Flashcards
Quantity Demanded
The amount of a good that consumers are willing to buy at a given price, holding constant the other factors that influence purchases.
Demand Curve
The quantity demanded at each possible price, holding constant the other factors that influence purchases.
Law of Demand
consumers demand more of a good the lower its price, holding constant tastes, the price of other goods, and other factors that influence consumption.
Quantity Supplied
The amount of a good that firms want to sell at a given price, holding constant other factors that influence firms’ supply decisions, such as costs and government actions.
supply curve
the quantity supplied at each possible price, holding constant the other factors that influence firms’ supply decisions.
Equilibrium
a situation in which no one wants to change his or her behavior.
Excess Demand
the amount by which the quantity demanded exceeds the quantity supplied at a specific price.
Excess Supply
the amount by which the quantity supplied exceeds the quantity supplied at a specified price.
Elasticity
Is the percentage change in a variable in response to a given percentage change in another variable.
Price elasticity of demand (or elasticity of demand )
the percentage change in the quantity demanded in response to a given percentage change in the price.
Cross-Price Elasticity of Demand
The percentage change in the quantity demanded in response to a given percentage change in the price of another good
Price Elasticity of Supply (or elasticity of supply)
The percentage change in the quantity supplied in response to a given percentage change in the price
Incidence of a tax on consumers
the share of the tax that falls on consumers
