Economics 1500

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Anonymous
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21858
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Economics 1500
Updated:
2010-06-03 00:00:54
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Supply and Demand
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  1. Law of Demand
    Quantity demanded rises as price falls, other things constant.

    Quantity demanded falls as price rises, other things constant.
  2. Demand Curve
    the graphic representation of the relationship between price and quantity demanded

    (price and demand are inversely related)
  3. Demand
    refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant (the entire curve)
  4. Quantity Demanded
    refers to a specific amount that will be demanded per unit of time at a specific price, other things constant (a single point on the curve)
  5. movement along a demand curve
    the graphical representation of the effect of a change in price on the quantity demanded
  6. shift in demand
    the graphical representation of the effect of anything other than price on demand
  7. Shift factors of demand
    • 1.) Society's income
    • 2.) The prices of other goods
    • 3.) Tastes
    • 4.) Expectations
    • 5.) Taxes on and subsidies to consumers
  8. market demand curve
    • the horizontal sum of all individual demand curves
    • aka total demand curve
  9. For market, the law of demand is based on two phenomena:
    • 1.) At lower prices, existing demanders buy more
    • 2.) At lower prices, new demanders (some all-or-nothing) enter the market
  10. Law of supply states
    Quantity supplied rises as price rises, other things constant.

    Quantity supplied falls as price falls, other things constant.
  11. Supply Curve
    the graphical representation of the relationship between price and quantity supplied
  12. Supply
    a schedule of quantities a seller is willing to sell per unit of time at various prices, other things constant
  13. Quantity supplied
    a specific amount that will be supplied at a specific price
  14. Movement along a supply curve
    the graphical representation of the effect of a change in price on the quantity supplied
  15. Shift in supply
    the graphical represenation of the effect of a change in a factor other than price on supply
  16. Shift factors of supply
    • 1.) Price of inputs
    • 2.) Technology
    • 3.) Expecations
    • 4.) Taxes and Subsidies
  17. Market supply curve
    the horizontal sum of all individual supply curves
  18. equilibrium
    a concept in whcih opposing dynamic forces cancel each other out
  19. Equilibrium Quantity
    amount bought and sold at equilibrium price
  20. Equilibrium price
    the price toward which the invisible hand drives the market
  21. Excess supply
    (a surplus) quantity supplied is greater than quantity demanded
  22. Excess Demand
    (a shortage) quantity demanded is greater than quantity supplied
  23. fallacy of compositiion
    the false assumption that what is true for a part will also be true for the whole

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