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25 terms

chapter 3 supply and demand

STUDY
PLAY
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