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22 Cards in this Set

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Competitive Market
A market in which there are many buyers and sellers of the same good or service.
Demand Schedule
A demand schedule shows how much of a good or service consumers will want to buy at different prices.
Demand Curve
The graphical representation of the demand schedule. Shows how much of a good or service consumers want to buy at a given price.

Basic demand curve for a normal good is "downward sloping"
Quantity Demanded
The actual amount consumers want to buy at some specific price.
Law of Demand
A higher price for a good, other things equal, leads people to demand a smaller quantity of the good.

Higher price --> Lower demand
Movement Along the Demand Curve
A change in the quantity demanded of a good that is the result of a change in that good's price.

The overall numbers of price and quantity DO NOT change.
Demand Curve Shift
At current prices we demand more or less of the good. Change in the relationship between price and quantity.

Changing the placement of the graph.
Demand Curve Shifters
1. Income (normal VS inferior good)
2. Number of Consumers
3. Taste and Preferences
4. Price of other Goods (substitutes VS compliments)
5. Price Expectations
Normal VS Inferior Good
Normal Good> Good that will still be demanded even when income goes up. EX: Steak and Crab

Inferior Good> Good that will not be demanded as income goes up. EX: Ramen and Fast Food
Substitute VS Compliment
Substitute> Can replace another good. EX: Cheetos VS Pringles

Compliment> Goes with the other good. EX: Shampoo and Conditioner. Peanut Butter and Jelly.
Supply Schedule
Shows how much of a good or service would be supplied at different prices.
Supply Curve
Shows graphically how much of a good or service people are willing to sell at any given price.
Law of Supply
All else equal, as the price of good X goes up, the quantity supplied of good X goes up.
Supply Curve Shifters
1. Technology
2. Weather
3. Price of an input for good X
4. Price Expectation of Suppliers
Movement Along the Supply Curve
A change in the quantity supplied of a good that is the result of a change in that goods price.
Shift of Supply Curve
The result of a decrease in the quantity supplied at any given price.
Input
A good that is used to produce another good.
Equilibrium
Qs = Qd

When no individual would be better off doing something different. Anytime there is a change, the economy will move to a new equilibrium (EX: What happens when a new checkout lane opens at a busy store)
Equilibrium Price (P*)
The price at which equilibrium takes place.
Market-clearing Price.
Every buyer finds a seller and vice versa.
P* comes from where the demand and supply curve intersect.
Equilibrium Quantity
Quantity of the good bought and sold at the same price.
Surplus
When the quantity supplied exceeds the quantity demanded.

Occurs when the price is above its equilibrium level.
Shortage
When the quantity demanded exceeds the quantity supplied.

Occurs when the price is below its equilibrium level.