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Fratrik Honors Econ
Unit Two Vocab-Supply and Demand - Ch 4, 5, and 6
| Term | Definition |
|---|---|
| change in demand | a shift of the demand curve, which changes the quantity demanded at any given price. |
| inferior good | a good for which a rise in income decreases the demand for the good. Ex. Ramen Noodles |
| complements | pairs of goods for which a rise in the price of one good leads to a decrease in the demand for the other good. Ex. Pancakes and syrup |
| law of demand | the principle that a higher price for a good or service, other things equal, leads people to demand a smaller quantity of that good or service |
| demand schedule | a list or table showing how much of a good or service consumers will want to buy at different prices. |
| competitive market | a market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold. |
| demand curve | a graphical representation of the demand schedule, showing the relationship between quantity demanded and price. |
| movement along the demand curve | a change in the quantity demanded of a good that results from a change in the price of that good. |
| normal good | a good for which a rise in income increases the demand for that good. Ex. new cars |
| quantity demanded | the actual amount of a good or service consumers are willing to buy at some specific price. |
| substitutes | pairs of goods for which a rise in the price of one of the goods leads to an increase in the demand for the other good. Ex. PlayStation and X-Box. |
| supply and demand model | a model of how a competitive market works. |
| change in supply | a shift of the supply curve, which changes the quantity supplied at any given price. |
| law of supply | other things being equal, the price and quantity supplied of a good are positively related |
| equilibrium price | the price at which the market is in equilibrium, that is, the quantity of a good or service demanded equals the quantity of that good or service supplied; also referred to as the market-clearing price. |
| movement along the supply curve | a change in the quantity supplied of a good that results from a change in the price of that good. |
| input | a good or service used to produce another good or service. Ex. labor or oil. |
| equilibrium | an economic situation in which no individual would be better off doing something different. |
| equilibrium quantity | the quantity of a good or service bought and sold at the equilibrium (or market-clearing) price. |
| quantity supplied | the actual amount of a good or service producers are willing to sell at some specific price. |
| shortage | the insufficiency of a good or service that occurs when the quantity demanded exceeds the quantity supplied; shortages occur when the price is below the equilibrium price. |
| supply curve | a graphical representation of the supply schedule, showing the relationship between quantity supplied and price. |
| supply schedule | a list or table showing how much of a good or service producers will supply at different prices. |
| surplus | the excess of a good or service that occurs when the quantity supplied exceeds the quantity demanded; surpluses occur when the price is above the equilibrium price. |
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