| Question | Answer |
| Demand | The desire, willingness & ability to purchase a G & S (at all possible prices) |
| Law of Demand | As price increases, quantity demanded decreases, as price decreases quantity demanded increases |
| Factors Affecting Demand | a) tastes & preferences
b) income change
c) population change
d) change with substitute goods
e) change with complementary goods
f) expectations |
| Substitute Goods | Image result for Substitute goods
Substitute goods are goods which, as a result of changed conditions, may replace each other in use |
| Complementary Goods | A good's demand is increased when the price of another good is decreased. |
| Elastic Demand | Price significantly affects the quantity demanded |
| Inelastic Demand | Price has minimal affect on quantity demanded |
| Utility | The power of a G/S to satisfy a want or need (the product's usefulness) |
| Law of Diminishing Marginal Utility | The amount of satisfaction decreases w/ each additional purchase (ex: eating a 3rd, 4th or 5th hotdog, seeing a movie for a 2nd, 3rd, or 4th time) |
| Supply | The amount of a G/S that producers are willing to produce at various prices |
| Law of Supply | As the price increases quantity supplied increases as the price decreases quantity supplied decreases |
| Factors Affecting Supply | a) number of competitors
b) production cost (price of inputs)
c) productivity
d) technology
e) gov't regulations
f) taxes & subsidies |
| Equilibrium Price/ Market price | The price point where quantity supplied meets the quantity demanded |
| Shortage | Having more quantity demanded than supplied (not enough G & S) |
| Surplus | Having more quantity supplied than demanded (left over G & S) |
