quantity demanded -- the amount of a product consumers are willing to buy
demand schedule -- a table of numbers that shows the relationship between price and quantity demanded, ceteris paribus
individual demand curve -- a curve that shows the relationship between price and quantity demanded by an individual consumer
Law of demand -- the higher the price, the smaller the quantity demanded
change in quantity demanded -- a change in the quantity consumers are willing to buy when the price changes; represented graphically by movement along the demand curve
substitution effect -- the change in consumption resulting from a change in the price of one good relative to the price of another good
income effect -- the change in consumption resulting from a change in purchasing power caused by a price change
market demand curve -- a curve showing the relationship between price and quantity demanded
quantity supplied -- the amount of a product firms are willing to sell
supply schedule -- a table of numbers that shows the relationship between price and quantity supplied
individual supply curve -- a curve showing the relationship between price and quantity supplied by a single firm
change in quantity supplied -- a change in the quantity firms are willing to sell when the price changes; represented graphically by movement along the supply curve
market supply curve -- a curve showing the relationship between price and quantity supplied
market equilibrium -- a situation in which the quantity of a product demanded equals the quantity supplied, so there is no pressure to change the price
excess demand -- a situation in which, at the prevailing price, consumers are willing to buy more than producers are willing to sell
excess supply -- a situation in which, at the prevailing price, producers are willing to sell more than the consumers are willing to buy
change in demand -- a change in the amount of a good demanded resulting from a change in something other than the price of the good; represented graphically by a shift on the demand curve
normal good -- a good for which an increase in income increases demand
inferior good -- a good for which an increase in income decreases demand
substitutes -- to goods that are related in such a way that an increase in the price of one good increases the demand for the other good
complements -- to goods related in such a way that a decrease in the price of one good increases the demand for the other good
change in supply -- a change in the amount of a good supplied resulting from a change in something other than the price of the good summer: represented graphically by shift on the supply curve
To drawl a demand curve, he must be certain that the other variables that affect demand:
- consumer income
- the prices of related goods
- tastes
- consumers price expectations
- number of consumers
To drawl in market supply curve, we must be certain the other variables that affect supply:
- input costs
- technology
- the number of producers
- their price expectations
- taxes
- subsidies
Equilibrium and a market is shown by the intersection of the demand curve and the supply curve. When a market reaches equilibrium, there is no pressure to change the price.
A change in demand changes price and quantity in the same direction: an increase in demand increases the equilibrium price and quantity; a decrease in demand decreases the equilibrium price and quantity.
A change in supplied changes price and quantity in opposite directions: an increase in the supply decreases price and increases quantity; a decrease in supply increases price and decreases quantity.
