Economics Chapter 3: Supply and Demand – Flashcards

a group of producers and consumers who exchange a good or service for payment

a market in which there are many buyers and sellers of the same good or service
(no individual’s actions have a noticeable effect on the price at which the good or service is sold)

describes how a competitive market behaves

a table showing how much of a good or service consumers will want to buy at different prices

the actual amount consumers are willing to buy at some specific price

a graphical representation of the demand schedule

the higher the price for a good or service, other things equal, leads people to demand a smaller quantity of that good or service

shows a change in the quantity demanded at any given price, represented by a change in the position of the original demand curve to a new location

changes in the quantity demanded of a good arising form a change in that good’s price

– Changes in prices of related goods or services
– Changes in income
– Changes in tastes
– Changes in expectations
– Changes in the number of consumers

when there is a rise in the price of one good the demand for the other good goes up
(substitutes are usually goods that in some way serve a similar function)

when there is a rise in the price of one good the demand for the other goes down
(complements are usually goods that in some sense are consumed together)

a goods where an increase in income increases demand for the good

goods for which demand decreases when income rises
(inferior goods are unusually considered less desirable than more expensive alternatives)

a curve showing the relationship between quantity demanded and price for an individual consumer

a curve showing the combined quantity demanded by all consumers depends on the market price of that good

the quantity that producers are willing to produce and sell at a given price

a table showing how much of a good or service producers are willing to supply at different prices

a graphical representation of the supply schedule

a change in quantity supplied at any given price, shown by a movement of the supply curve to a new position

changes in the quantity supplied arising from a change in price

– Changes in input prices
– Changes in the prices of related goods or services
– Changes in technology
– Changes in expectations
– Changes in the number of producers

any good or services that is used to produce another good or service

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

shows how the combined total quantity supplied by all individual producers in the market depends on the market price of that good

occurs when the price has moved to a level at which the quantity of a good demanded equals the quantity of that good supplied

the price that matches the quantity supplied and the quantity demanded
(also known as the market-clearing price)

the quantity bought and sold at the equilibrium price

occurs when there’s more a good or services supplied exceeds the quantity demanded
(occur when the price is above equilibrium level; also known as excess supply)

occurs when the quantity demanded of a good or service exceeds the quantity supplied of that good or service
(occurs when the price is below its equilibrium level; also known as excess demand)