Supply and demand key terms Flashcards
The desire to own something and the ability to pay for it
Demand
Consumers will buy more of a good when its price is lower and less when its price is higher
Law of demand
A latin phrase that means “all other things held constant”
Ceteris Paribus
A measure of the way quantity supplied reacts to a change in price
Elasticity of Demand
The amount of a good or service that is available
Supply
Products offer more of a good or a service as its price increases and less as its price falls
Law of Supply
A measure of the way quantity supplied reacts to a change in price
Elasticity of supply
The point at which the demand for a product or service is equal to the supply of that product or service
Equilibrium
A situation in which consumers want more of a good than producers are willing to make available at a particular price
Shortage
When quantity supplied is more than the quantity demanded
Surplus
A maximum price that can be legally charged for a good or service
Price ceiling
A minimum price for a good or service
Price floor
