Chapter 3 Flashcards
Quantity demanded
The price of a good a consumer is willing to get
Demand schedule
A table showing the relationship between the price and demand of a good
Demand curve
A curve showing the relationship between the price and demand of a good
Market demand
The demand of all consumers
Law of demand
Price increase, quantity demand decrease; price decrease, quantity demand increase
Normal
Demand increase, income increase
Inferior
Demand increase, income decrease
Substitue
goods that are used for the same purpose
Complements
Goods that can be used together
Income effect
Changing the price effects the consumers purchasing power
Substitution effect
Change in price effects quantity demanded by making it more or less expensive than substitute goods
Ceteris paribus
“All else equal” holding everything constant
5 important economic variables that shifts demands
1) Income
2) Taste
3) Price of related goods
4) Expected future prices
5) Population
Quantity supplied
amount of a good or service that a firm can supply
Supply schedule
a table showing the relationship between the price and the quantity supplied