Micro Chapter 3: Supply and Demand

22 terms by kdaigle56

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su

competitive market

market where there are many buyers and sellers of the same good

supply and demand

model of how a comparative market works

demand schedule

how much of a good or service consumers want to buy at different prices

demand curve

representation of demand schedule

law of demand

higher price for a good that leads people to demand a smaller quantity

shift in demand curve

change in the quantity demanded at any given price

quantity demanded

actual amount of good consumers are willing to buy

Substitutes

rise in price of one items causes rise in price of another item

Compliments

if a rise in price of one good leads to the decrease in demand of another good

5 principal factors that shift the demand curve

1. change in price of related goods 2. change in income 3. change in tastes 4. change in expectations 5. change in # of consumers

Normal Good

rise in income increases the demand for a good

Inferior good

when rise in income decreases the demand for the good

individual demand curve

shows relationship between quantity demanded and and price for an individual

quantity supplied

actual amount of a good producers are willing to sell at

supply schedule

shows how much of a good producers are willing to supply at different prices

supply curve

relationship between price and quantity supplied

shift in supply curve

change in supply supplied of a good at any time

movement along supply curve

change in quantity supplied of a good that is the result in change of a goods's price

5 factors for supply curve shifts

1. change in input prices 2. change in price of related good 3. change in technology 4. change in expectations 5. change in number of producers

equilibrium price

price that matches quantity supplied and quantity demanded

equilibrium quantity

quantity sold and bought at that price

market-clearing price

equilibrium price

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