Supply & Demand - Vocabulary Flashcards
What is a market?
Where consumers and producers come together to establish an equilibrium price and quantity for a good or service
What is demand?
The willingness and ability to purchase a quantity of a good or service at a certain price over a given time frame
What is the law of demand?
as price of a good or service rises, the quantity demanded decreases, ceteris paribus
What is ceteris paribus?
expression meaning “let all other things remain equal”
What is the demand curve?
graphical representation of the law of demand, usually a downward sloping curve, illustrating the inverse relationship between price and quantity demanded
What is supply?
the willingness and ability of a producer to produce a quantity of a good or service at a certain price over a given time frame
What is the law of supply?
as the price of a good rises, the quantity supplied increases, ceteris paribus
What is the supply curve?
graphical representation of the law of supply, it is an upward sloping curve illustrating the direct relationship between price and quantity supplied
What is equilibrium price?
Market clearing price, it occurs where demand equals supply
What is a price ceiling?
price set by the government, above which the price is not allowed to rise. It may be set to protect consumers from high prices, and it may be used in markets for essential goods such as rice, or house rentals
what is a price floor?
price set by the government, below which the price is not allowed to fall. It may be set to protect producers producing essential products form facing process that are felt to be too low
What is a buffer stock scheme?
sets a maximum and a minimum price in a market to stabilize prices
