the ability and desire to purchase goods and services
law of demand
consumers buy more of a good when its price decreases and less when its price increases
a table that shows the relationship between the price of a good and the quantity demanded
diminishing marginal utility
the principle that our additional satisfaction, or our marginal utility, tends to go down as more and more units are consumed
the change in consumption resulting from a change in real income
law of supply
Tendency of suppliers to offer more of a good at a higher price
when consumers react to an increase in a good's price by consuming less of that good and more of other goods
a graph of the relationship between the price of a good and the quantity supplied
a graph of the relationship between the price of a good and the quantity demanded
determinants of supply
Factors such as input prices, productivity, and the legal-institutional environment that, if they change, shift the aggregate supply curve.
determinants of demand
factors other than price that determine the quantities demanded of a good or service
change in supply
A change in the quantity supplied of a good or service at every price; a shift of the supply curve to the left or right.
Goods for which demand goes up when income is higher and for which demand goes down when income is lower.
the price that balances quantity supplied and quantity demanded
the quantity supplied and the quantity demanded at the equilibrium price
the property of being an amount by which something is less than expected or required
maximum price that can be charged for goods and services, set by the government.
floor below which prices are not allowed to fall
a table that shows the relationship between the price of a good and the quantity supplied
offering goods and services for sale
change in quantity demanded
a movement along the demand curve that occurs in response to a change in price
goods that are used together with others, usually demanded together. Price of one good goes up, demand for other goes down (gas/motor oil, tuition/textbooks)
goods that can be used to replace the purchase of similar goods when prices rise
a good for which, other things equal, an increase in income leads to a decrease in demand