Economics Chapter 2

Front 1

Supply

Back 1

The willingness and ability of sellers to provide goods for sale in a market.

Front 2

Demand

Back 2

The willingness and avility of buyers to purchase goods.

Front 3

Law of demand

Back 3

The principle that an inverse relationship exists between the price of a good and the quantity of that good that buyers demand, other things being equal.

Front 4

Demand curve

Back 4

A graphical representation of the relationship between the price of a good and the quantity of that good that buyers demand.

Front 5

Change in quantity demanded

Back 5

A change in the quantity of a good that buyers are willing and able to purchase that results from a change in the good's price, other things being equal; shown by a movement from one point to another along a demand curve.

Front 6

Change in demand

Back 6

A change in the quantity of a good that buyers are willing and able to purchase that results from a change in some condition other than the price of that good; shown by a shift in the demand curve.

Front 7

What are the main factors contributing to shifts in the Demand curve?

Back 7

1) Changes in the price of a related good.
2) Changes in consumer incomes.
3) Changes in Expectations
4) Changes in Tastes

Front 8

Substitute goods

Back 8

A pair of goods for which an increase in the price of one causes an increase in demand for the other.

Front 9

Complementary goods

Back 9

A pair of goods for which an increase in the price of one results in a decrease in demand for the other.

Front 10

Normal good

Back 10

A good for which an increase in consumer incomes results in an increase in demand. As consumer incomes rise, the demand curve for a normal good moves to the right.

Front 11

Inferior good

Back 11

A good for which an increase in consumer incomes results in a decrease in demand. As consumer incomes rise, the demand curve for an inferior good shifts to the left instead of to the right.

Front 12

Supply curve

Back 12

A graphical representation of the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

Front 13

Change in quantity supplied

Back 13

A change in the quantity of a good that suppliers are willing and able to sell that resultes from a change in the good's price, other things being equal; shown by a movement along a supply curve.

Front 14

Change in supply

Back 14

A change in the quantity of a good that suppliers are willing and ble to sell that results from a change in some condition other than the good's price; shown by a shift in the supply curve.

Front 15

What are the four main factors contributing to shifts in the Supply curve?

Back 15

1) Changes in Technology
2) Changes in Input Prices
3) Changes in the Prices of Other Goods
4) Changes in Expectations

Front 16

Equilibrium

Back 16

A condition in which buyers' and sellers' plans exactly mesh in the marketplace, so that the quantity supplied exactly equals the quantity demanded at a given price.

Front 17

Excess quantity demanded (shortage)

Back 17

A condition in which the quantity of a good demanded at a given price exceeds the quantity supplied.

Front 18

Inventory

Back 18

A stock of a finished good awaiting sale or use.

Front 19

Excess quantity supplied (surplus)

Back 19

A condition in which the quantity of a good supplied at a given price exceeds the quantity demanded.