Microeconomics- Unit 2: Supply, Demand, and Consumer Choice

rule stating that more will be demanded at lower prices and less at higher prices; inverse relationship between price and quantity demanded

when consumers react to an increase in a good's price by consuming less of that good and more of a substitute good

refers to the change in the quantity of a product demanded by consumers due to a change in their income

the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time

number of Buyers
price of Related goods
amount of consumer Income
consumer Tastes and preferences
consumer Expectations

products or services that can be used in place of each other

two goods that provide more utility when consumed together than when consumed separately

goods for which demand goes up when income is higher and for which demand goes down when income is lower; "name-brands"

goods for which demand tends to fall when income rises; "generic brands"

the principle that suppliers will normally offer more for sale at high prices and less at lower prices

Resource costs
changes in price of Other goods
changes in Technology
Taxes & subsidies
price Expectations
Number of sellers

the amount of the good businesses provide at a specific price

the amount of a good or service offered for sale

the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

the quantity at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

a situation in which quantity supplied is greater than quantity demanded

a situation in which quantity supplied in less than quantity demanded

difference between what a consumer is willing to pay for a good and the amount actually paid

difference between the lowest price a firm would be willing to accept for a good or service and the price it actually receives

usually caused by independent causes, effect of price and quantity is ambiguous

a legal minimum on the price at which a good can be sold

a legal maximum on the price at which a good can be sold

the reduction in economic surplus resulting from a market not being in competitive equilibrium

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

a means for determining whether demand is elastic or inelastic; If an increase in price causes an increase in total revenue, then demand can be said to be inelastic,

the responsiveness of demand to a change in income

the responsiveness of the quantity demanded for a good to a change in the price of another good

measures the responsiveness of quantity supplied to a change in price

specialization, efficient use of world resources, increase world output, increase consumption, consumer choice with range of goods, increased competition, exploit economies of scale, technology transfer and economic development

a tax on imported goods

a limit placed on the quantities of a product that can be imported

a tax on the production or sale of a good

the extra or additional benefit received from consuming one more unit of a good or service

the extra or additional benefit received from consuming one more unit of a good or service

the principle that to obtain the greatest utility, the consumer should allocate money income so that the last dollar spent on each good or service yields the same marginal utility