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Production Possibilities Frontier
a graph that shows the various mixes of output that an economy can produce; illustrates that people face trade-offs
the ability to produce a good at a lower opportunity cost than another producer
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
Law of Demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
a table that shows the relationship between the price of a good and the quantity demanded
a good for which, other things equal, an increase in income leads to an increase in demand
a good for which, other things equal, an increase in income leads to a decrease in demand
two goods for which an increase in the prices of one leads to an increase in the demand for the other
two goods for which an increase in the price of one leads to a decrease in the demand for the other
Law of Supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
a table that shows the relationship between the price of a good and the quantity supplied
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
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