Supply, Demand & Market Equilibrium (Chptr 3)

Front 1

Schedule/curve illustrating various amounts of a good buyers are willing & able to purchase at each of a series of possible prices during a specified period of time

Back 1

Demand

Front 2

Inverse (negative) relationship between price & quantity demanded; price rise, demand falls and vice versa

Back 2

Law of Demand

Front 3

Factors other than the price of the product being considered affect the amount purchased

Back 3

Other-things-equal

Front 4

Lower price increases the purchasing power of a buyer's money income, enabling the buyer to purchase more of the product than before

Back 4

Income effect

Front 5

At lower prices buyers have the incentive to substitute a less expensive product for other products relatively more expensive

Back 5

Substitution Effect

Hint 5

product whose price has fallen is now a better deal relative to other products

Front 6

Curve illustrating the demand for a product by showing how each possible price is associated with a specific quantity demanded

Back 6

Demand Curve

Hint 6

downward slope; people buy more of a product as it's price falls

Front 7

Movement along a demand curve; more or less quantity demanded due to only a change in price

Back 7

Change in quantity demanded

Hint 7

more

Front 8

Right or left shift of a demand curve due to anything else (e.g. consumers' taste, price of related goods, consumers' income, population)

Back 8

Change in Demand

Hint 8

more or less demanded

Front 9

Rightward shift if demand curve

Back 9

Increase in demand

Front 10

Movement along the supply curve; more or less quantity supplied due to change in price only

Back 10

Change in quantity supplied

Hint 10

more

Front 11

Right or left shift of supply curve due to factors other than price (e.g. resource prices, taxes, technology, # of sellers)

Back 11

Change in supply

Front 12

Factors influencing the quantity of a product supplied (e.g. # of sellers, resource prices, producer expectations, taxes, technology)

Back 12

Determinants of Supply

Hint 12

"supply shifters"

Front 13

Leftward shift of supply curve due to rise in production costs

Back 13

Decrease in supply

Front 14

Rightward shift of supply curve due to fall in production costs

Back 14

Increase in supply

Front 15

Goods for which income and demand are indirectly related

Back 15

Inferior goods

Hint 15

What would you buy more of if your income fell? Buy less of if your income rose?

Front 16

Quantity at which the intentions of buyers & sellers match; quantity demanded & quantity supplied are equal

Back 16

Equilibrium Quantity (Eq'm Q)

Front 17

Excess supply; prices > Eq'm P result in this:

Back 17

Surplus

Hint 17

Price will fall as firms reduce price to get rid of excess supply

Front 18

Excess demand; prices < Eq'm P result in this:

Back 18

Shortage

Hint 18

Price will rise as consumers bid up the price to aquire scarce quantities

Front 19

Production of any particular good in the least costly way

Back 19

Production Efficiency

Front 20

Leftward shift of demand curve

Back 20

Decrease in demand

Front 21

The output of a product at which it's marginal cost & price or marginal benefit are equal, and sum of consumer surplus & producer surplus is maximized

Back 21

Allocative Efficiency

Hint 21

particular mix of goods and services most highly valued by society

Front 22

Sets the max legal price a seller may charge for a product or service

Back 22

Price Ceiling

Hint 22

price at or below this point is legal & price above this point is not

Front 23

A minimum price fixed by the government

Back 23

Price Floor

Hint 23

price at or above this point is legal and price below this point is not

Front 24

Factors influencing the amount of any product purchased (e.g. consumers' taste, # of buyers, income, prices of related goods & consumer expectations)

Back 24

Determinants of demand

Hint 24

"demand shifters"

Front 25

A good that can be used in place of another good

Back 25

Substitute good

Front 26

A good that is used together with another good

Back 26

Complementary good

Front 27

Goods whose demand varies directly with income; "superior goods"

Back 27

Normal goods

Hint 27

What would you buy more of if your income rose? Buy less of if your income fell?

Front 28

Goods for which income and demand are indirectly relato

Back 28

Inferior goods

Hint 28

What would you buy more of if your income fell? Buy less of if your income rose?

Front 29

Schedule/curve showing various amounts of a product producers are willing & able to make available for sale at each series of possible prices

Back 29

Supply

Front 30

Principle that an increase in the price of a product will increase the quantity of it supplied and vice versa; this is not a change in supply

Back 30

Law of Supply

Hint 30

Price & quantity directly related

Front 31

Curve illustrating how each possible price of a product is associated with a specific quantity supplied

Back 31

Supply curve

Hint 31

curve graphs as an upward slope; price "P" vertical axis & quantity "Q" horizontal axis