Microeconomics - Chapter 3 Supply and Demand
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29 terms
Terms | Definitions |
|---|---|
 market activity | The basic goals of utility maximization, profit maximization, and welfare maximization explain most _____________. |
| Inable | We are absolutely ________________ to produce all the things we need or desire. |
| Time, energy, resources | The limited amount of _____________, _______________, _____________ we have for producing those things we could make for ourselves. |
| Circular flow chart | summarizes the kinds of interactions that occur among market participants. |
| factor market | any place where factors of production are bought and sold |
| product market | any place where finished goods and services are bought and sold |
| opportunity cost | the most desired goods or services that are forgone in order to obtain something else |
| the consumer | the final recipient of all goods and services produced |
| exchange | a market exists wherever and whenever an ________________ takes place. |
| dollars, resources | Every market transaction involves an exchange of ___________ for goods (in product markets) or _____________ (in factor markets). |
| supply | the ability and willingness to see (produce) specific quantities of a good at alternative prices in a given time period. |
| demand | the ability and willingness to buy specific quantities of a good at alternative prices in a given time period. |
| demand schedule | a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period |
| demand curve | a curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period; it shows us how changes in market prices alter consumer behavior |
| price | the amount we buy of a good depends on its... |
| price falls | As a good's ______________, people purchase more of it. |
| law of demand | the quantity of a good demanded in a given time period increases as its price falls |
| Determinants of market demand | Tastes, income, other goods, expectations, number of buyers |
| substitute goods | goods that substitute for each other; when the price of good x rises, the demand for good y increases |
| complementary goods | goods frequently consumed in combination; when the price of good x rises, the demand for good y falls |
| Rightward shift in demand curve | occurs when income increases and an increase in taste (desire) |
| movements along the demand curve | a response to prices changes for that good |
| shifts in the demand curve | occur when the determinants of demand change |
| changes in quantity demanded | movements along a demand curve are caused by |
| changes in demand | shifts in a demand curve are caused by |
| market demand | the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands |
| the number of potential buyers and their respective tastes, incomes, other goods, and expectations | the market demand is determined by |
| determinants of market supply | technology, factor costs, other goods, taxes and subsidies, expectations, number of sellers |
| market supply | the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period |
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