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15 Cards in this Set
- Front
- Back
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demand
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a schedule showing a series of prices and quantities that consumer would be willing and able to buy at a specific point in time.
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determinants of demand
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changes in taste, income, number of buyers, and related goods which cause a fundamental change in the way that consumers view a particular product or service
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determinants of supply
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changes in resource prices, technology, expectations, related goods, taxes and subsidies or the number of producers which cause a fundamental change in the way that producers view a particular product or service
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equilibrium
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that point in an individual market where quantity demanded equals quantity supplied. It is always where the curves cross - the market is cleared with no surplus or shortage
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law of demand
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this law assumes an inverse relationship between price and quantity. At a higher price, quantity demanded declines - at a lower price, the quantity demanded increases.
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law of supply
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this law assumes a direct relationship between price and quantity. At a higher price, producers will produce more. At a lower price, the quantity will decline.
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market shortage
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the quantity demanded is greater than the quantity supplied
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market surplus
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the quantity supplied is greater than the quantity demanded
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market system
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where buyers and sellers meet. It provided for the free interaction of buyer and seller in the market place.
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price ceiling
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government sets a price that is below the equilibrium price
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price floor
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government sets a price that is above the equilibrium price
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price function
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in a market, price measures scarcity. If the product is more scarce, price goes up; if less scarce, it will go down. Price is an important mechanism for allocating scarce resources in a market.
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pure competition
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a large number of independently acting buyers and sellers in a market place where no one producer can unduly affect that market.
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quantity demanded
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on a demand schedule, this is one amount that corresponds to one price. A change in price will change this.
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quantity supplied
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on a supply schedule, this is one amount that corresponds to one price. A change in price will change this.
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