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Economics Ch. 4
The Laws of Supply and Demand
| Term | Definition |
|---|---|
| These are the two chief types of value.... | Value in use and Value in exchange |
| this is value directly related to the benefits their owners receive through their use. | Value in use |
| Value in which a particular good is worth in exchange for some other good. | Value in exchange |
| This is the amount of money that a buyer pays the seller for a particular item | Price |
| the amount of money or goods that a good will command in a market | Market price |
| As one's supply of a specific good or service increases, the satisfaction derived from each additional unit tends to decrease. What is this? | Diminishing marginal utility |
| This is the amount of satisfaction that results from a one - unit increase of a product. | Marginal utility |
| This is the total amount of satisfaction a consumer receives from possessing a particular amount of some good. This is the total of all marginal utility | Total Utility |
| This is the relationship between a good's price and the amount that people are willing to buy | Demand |
| Other things remaining equal, as the price of a good increases, the quantity demanded decreases in a free market economy | Law of demand |
| This is when the price of a good falls and consumers tend to buy more of that good or of the other items because they can do so without giving up anything. They have expanded buying power, | Income effect |
| This law explains the inverse relationship between the price of a good and the amount that people choose to buy. | Law of demand |
| This is a principle stating that people tend to substitute less expansive goods for goods whose prices have risen. | Substitution effect |
| This is a list of numbers that compares price with quantity demanded | Demand schedule |
| This is a graphic representation of the amount of goods purchased at different prices | Demand curve |
| These are five key factors that can shift a demand curve | 1) Tastes and Preferences 2) Income 3) Population 4) Prices of related goods 5) Consumer Expectations |
| This is a good whose demand is directly related to consumer's incomes like steaks and new cars and airlines | Normal good |
| This is a good whose demand for these items falls as consumers' incomes rice and vice versa. | Inferior good |
| This is a good capable of being used in place of another good; and can be substitutes for one another, price of one good has a direct relationship upon the demand for the other- as the price of one good rises, the demand for its substitute increases | Substitute good |
| This is a good often used in conjunction with another. The price of one affects the demand for the other. The price of one rises and the demand for the other falls | Complement good |
| This is the result of changes in any of the five factors that shift a demand curve, which cause the whole curve to shift to the left or right | Change in demand |
| This refers to the movement from one point to another on a long fixed demand curve. Influenced by price. Only a increase or decrease of price can change this, | Change in Quantity demanded |
| This is the relationship between a good's price and the amount that producer's are willing to supply | Supply |
| This is a law that states other things remaining equal, as the price of a good increases, the quantity supplied also increases in a free market economy | Law of supply |
| This law states that the direct relationship between the price of a good and the amount that suppliers will make available. Its saying that if the price of a good drops, the quantity that is supplied of that good also falls. | Law of supply |
| This is a list of numbers that compares price with quantity supplied | Supply schedule |
| This is a graphic representation of the quantity of goods supplied at different prices. | Supply curve |
| This is the quantity of a good that producers will supply at a given price per unit within a specified amount of time. | Quantity supplied |
| These are factors that can shift a supply curve what are they? | 1) Technology 2) Resource Prices 3) Prices of related goods 4) Number of sellers 5) Producer expectations 6) Government taxes, subsidies, Regulations |
| This is money given to businesses by the government to encourage production. | Subsidies |
| This is caused only by a change in price within an existing supply. This moves one point on a supply curve to another point on the same curve. | Change in quantity supplied |
| This is another name for a supplier | Producer |
| This is another name for a demander | Consumer |
| This is the place at which the quantity demanded and quantity supplied are equal | Equilibrium |
| This is a situation in which the quantity demanded exceeds the quantity supplied at a given price | Shortage |
| This is when the quantity supplied of a good is greater than the quantity demanded at a given price | Surplus |
| This is when prices go up and people will buy less | Price elasticity of demand |
| This is the demand for a good whose price has raised really high, but consumers still pay for it for they feel their are no substitutes for it. | Inelastic |
| This is when governments place a limit on how a producer may charge for his product. | Price ceilings |
| This is when the price levels are set above the equilibrium prices. | Price floors |
| The result of this often results in a shortage of goods | Price ceiling |
| The result of this is often a surplus of goods | Price floor |
| True or false demand is mostly elastic | True |
Created by:
Leslie Spark
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