chapter 3 supply and demand

25 terms by jenay_m10 

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supply and demand model

a model of a competitive market

competitive market

one in which there are many buyers and sellers of the same good or service

demand schedule

shows how the quantity demanded changes as the price changes

law of demand

asserts that a higher price reduces the quantity demanded

shifts of the demand curve

increases or decreases in demand correspond to

rightward shift

an increase in demand is a ______ the quantity demanded rises for any given price

leftward shift

a decrease in demand is a _______ the quantity demanded falls for any given price

movement along the demand curve

a change in price results in____

individual demand curve

illustrates the relationship between quantity demanded and price for an individual consumer

normal good

when a rise in income increases the demand for a good

inferior good

when a rise in income decrease the demand ofr a good it is an inferior good

substitutes

if a rise in the price of one of two goods leads to an increase in the demand for the other good

complements

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

quantity supplied

is the actual amount of a good or service producers are willing to sell at some specific price

supply schedule

shows how much of a good or service producers will supply at different prices

supply curve

shows the relationship between quantity supplied and price

shift of the supply curve

is a change in the quantity supplied of a good or service at any given price

movement along the supply curve

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

input

is a good or service that is used to produce another good or service

individual supply curve

illustrates the relationship between quantity supplied and price for an individual producer

equilibrium price

the price that matches the quantity supplied and the quantity demanded is the ____

equilibrium quantity

the quantity bought and sold at that price is the _______

market clearing price

the price that clears the market by ensuring that every buyer willing to pay that price finds a seller willing to sell at that price and vice versa

surplus

when the quantity supplied exceeds the quantity demanded... when the price is above its equilibrium level

shortage

when the quantity demanded exceeds the quantity supplied

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