Flashcards in Discovery Unit 3 Glossary Deck (25):
Refers to the total number of units of a good that buyers are willing and able to purchase at a given price.
What a buyer pays (or the seller receives) for a unit of the specific good or service.
Refers to how much of a good consumers are willing and able to purchase at all prices.
law of demand
The relationship between price and quantity demanded. All else equal, a rise in the price of a good decreases the quantity demanded of that good, while a fall
in price increases the quantity demanded.
A table that shows the relationship between price and quantity demanded.
A graph that shows the relationship between price and quantity demanded.
A Latin phrase meaning ﾓother things being equal.ﾔ It is the assumption behind a demand curve that no other relevant economic factors are changing.
determinants of demand
Various factors that may cause a demand curve to shift. These factors include income, population, expectations, and prices of closely related goods.
If demand for a good rises as income rises, the good is known as a normal good.
If demand for a good falls as income rises, the good is known as an inferior good.
When an increase in the price of good 1 causes the demand for good 2 to increase, these goods are known as complements.
When an increase in the price of good 1 causes the demand for good 2 to decrease, these goods are known as substitutes.
Refers to the total number of units that sellers are willing and able to sell at a given price.
Refers to how much sellers are willing and able to sell at all prices.
law of supply
Pattern in which a rise in the price of a good or service almost always leads to an increase in the quantity supplied of that good or service, while a fall in price will decrease the quantity supplied.
A table that shows the relationship between price and quantity supplied.
A graph that illustrates the relationship between price and quantity supplied.
determinant of supply
Various factors that may cause a supply curve to shift. They determine the quantity that firms are willing to sell at a given price.
Price where quantity demanded is equal to quantity supplied.
Where quantity supplied equals quantity demanded at the equilibrium price.
Occurs if buyers want to buy more than sellers want to sell. Also known as excess demand.
Occurs when sellers want to sell more than buyers want to buy at any given price. With a surplus situation, prices drop until the market reaches equilibrium. Also refers to when there are more loanable funds than borrowers want to borrow. Also known as excess supply.
Laws that the government enacts to regulate prices. The two types of price controls are a price ceiling and a price floor.
Type of price control that keeps a price from rising above a certain level.