Supply & Demand Flashcards
(26 cards)
Demand
Consumer willingness and ability to purchases a good/service
Supply
Producer willingness and ability to create a good/service
What causes a change in quantity demanded?
What causes change in Demand?
Elasticity of Demand
A change in demand when one consumer variability.
Equilibrium
When Demand and Supply meet. The ideal point for consumers and producers.
Also known as Market Price
What happens if Demand decreases?
Price goes down, Quantity goes down
What happens if Supply Increases?
Prices goes down, Quantity goes up
What happens if Demand increases?
Prices goes up, Quantity goes up
What happens if Supply decreases?
Prices goes up, Quantity goes down
What shifts Demand?
-Change in consumer tastes
-Change in consumer income
-Change in price of substitute
-Change in complementary good/service
-Consumer expectation
-Change in Population
What shifts Supply?
Cost of availability of resources
Productivity rate
Technology
Expectation
Government regulations
Number of producers
Taxes
What does a demand curve describe?
relationship between Price and Quantity demanded
What does a supply curve describe?
relationship between Price and Quantity supplied
What is the Law of Demand?
As price of a good/service increases, quantity decreases;
As price of a good/service decreases, quantity increases
What is the Law of Supply?
As price of a good or service increases, quantity supplied increases;
As price of good/service decreases, quantity supplied decreases
Price Ceiling
A set maximum that a product/service could be sold for (results in surplus)
Price Floor
A set minimum that a product/service could be sold for (results in shortage)
Surplus
When a good or service is priced above market clearing price
(Not enough demand for supply)
Shortage
When a good or service is priced below the market clearing price
(Not enough supply for demand)
Inelastic Demand
Price changes does not greatly affect demand
Elastic Demand
Price changes strongly affect demand
Perfectly Inelastic
Price changes do not affect demand at all
Perfectly Elastic
Quantity demanded changes infinitely to any change in price
