CH 2 Flashcards
What factos affect how much of a good or service consumers buy
Price, tastes, information, price of other goods, income, and government rules and regulation
Law of Demand
consumers demand more of a good the lower its price holding constant all other factos that influence the amount they consume
Substitute
a good or service that may be consumed insted of another good or serivce
Complement
A good or service that is jointly consumed with another good or service
What causes a movement along the demand curve
a change in price
What causes a shift of the demand curve
A change in any factor other than a good’s price
Excess demand
the amount by which the quantity demanded exceeds the quantity supplied at a specified price
Excess Supply
the amount by which the quantity supplied is greater than the quantity demanded at a specified price
The supply and demand model applies to markets in which:
eveyone is a price taker, firms sell identical products, everyone has full information about the price and quality of goods, costs of trading are low
What causes movement along the supply curve
change in price
What causes a shift of the supply curve
A change in government regulations, technology, or the price of an inpute
