Term
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Definition
| "Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded" |
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Term
| Higher price influences the quantity demanded because of 2 reasons: |
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Definition
-Substitution effect
-Income effect |
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Term
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Definition
| When the relative prices (opportunity cost) of a good rises, people seek substitutes for it, so the quantity demanded of the good or service decreases |
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Term
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Definition
| When the price of a good or service rises relative to income, people cannot afford all the things they previously bought, so the quantity demanded of the good or service decreases |
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Term
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Definition
-shows the relationship between the quantity demanded of a good and its price when all other influences on consumers' planned purchases remain the same
-also a willingness-and-ability-to-pay curve: tells us maximum someone is willing to pay for an additional unit |
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Term
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Definition
| when any factor that influences buying plans changes, other than the price of the good, there is a change demand for that good |
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Term
| Six main causes for change in demand (other than price) |
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Definition
1)The price of related goods: substitute and complement
2)Expected future prices
3) Income of buyers
4) Expected future income
5) Population of buyers
6) Preferences of buyers |
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Term
| Movement along the demand curve |
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Definition
-if the price of the good changes but no other influence on buying plans changes
-shows a change in the quantity demanded |
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Term
| Shift of the Demand Curve |
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Definition
-if the price of the good remains the same but one of the other influences on buyers' plans changes
-shows a change in demand |
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Term
| Shift of the Demand Curve |
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Definition
-if the price of the good remains the same but one of the other influences on buyers' plans changes
-shows a change in demand |
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Term
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Definition
"Other things remaining the same, the higher the price of a good, the greater is the quantity supplied, and the lower the price of a good, the smaller is the quantity supplied
-results from the general tendency for the MC of producing a good or service to increase as the quantity produced increases |
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Term
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Definition
Shows the relationship between the quantity supplied of a good and its price when all other influences on producers' planned sales remain the same
-refers to the entire relationship between the quantity supplied and the price of a good
-also a minimum-supply-price curve: shows the lowest price at which someone is willing to sell |
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Term
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Definition
| when any factor that influences selling plans other than the price of the good changes |
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Term
| 6 main factors for supply change |
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Definition
1) Prices of factors of production
2) Prices of related goods produced
3) Expected future prices
4) Number of suppliers
5) Technology
6) State of nature |
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Term
| Movement along the supply curve |
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Definition
when the price of the good changes and other influences on sellers' stays the same
-shows a change in the quantity supplied of that good |
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Term
| Shift of the supply curve |
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Definition
if the price remains the same but some other influence on sellers' part changes
-shows a change in supply |
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Term
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Definition
| occurs when a market occurs when the opposing forces of buyers and sellers on price are balanced |
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Term
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Definition
the price at which the quantity demanded equals the quantity supplied
-at equilibrium price, buyers' plans and sellers' plans agree and the price doesn't change until some event changes either demand or supply |
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Term
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Definition
| the quantity bought and sold at the equilibrium price.. |
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