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Supply
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The various quantities of a good or service that producers are willing to sell at all possible market prices
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market supply
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total of all supply schedules of all the businesses that provide the same good or service
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happens as price rises for a good
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quantity supplied rises
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happens as price falls for a good
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quantity supplied falls
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Law of Supply
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the principle that suppliers will normally offer more for sale at higher prices and less at lower prices
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Supply Curve
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a graph that shows the amount of a product that would be supplied at all possible market prices
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Profit
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money a business receives for its products or services over and above their costs
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Supply curve moves left
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supply goes down(quantity decreases, price increases)
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Supply curve moves right
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supply increases(quantity increases, price decreases)
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Supply elasticity
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measure of how quantity supplied changed according to price
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elastic
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large quantity changes when prices change
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in-elastic
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small quantity changes when prices change
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Demand
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desire, willingness, and ability to buy a good or service
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Individual Demand Schedule
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table listing quantities of goods and services that people are willing to buy at different prices
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Individual Demand Curve
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graph showing amount of good/service that would be bought at all possible prices in the market
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Law of Demand
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states that quantity demanded and price move in opposite directions
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market demand
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the sum of the individual demand for a product/service from all buyers in the market
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Utility
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satisfaction you get from a product
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Diminishing marginal utility
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extra satisfaction decreases as more of a product is consumed
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Demand Elasticity
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extent to which price changes cause a change in the quantity demanded
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Compliments to a product
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thing that goes commonly with a product(Ex: bacon and eggs, gas and a car)
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Shortage
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amount by which quantity demanded is higher than quantity supplied at any given price
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signaled by a shortage
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price is too low
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Surplus
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amount quantity supplied is higher than quantity demanded at a given price
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signaled by a surplus
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price is too high
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Equilibrium Price
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Point where supply and demand achieve balance, there is neither a shortage nor a surplus
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Price Ceiling
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the maximum price that can be charged for a good or service, which is set by the government. Ex: Rent controlled apartment
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Price Floor
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the minimum price that can be charged for a good or service, which is set by the government. Ex: minimum wage
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Minimum wage
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the lowest legal wage that can be paid to most workers
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