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Microeconomics
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The study of how individual human action/decisions affect production, consumption, and distribution of goods and services.
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Law of Demand
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As the price of a good or services increases, the quantity that people are able or willing to buy decreases and vice versa.
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Demand
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The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.
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Quantity Demanded
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The quantity people can and are willing to buy at a specific price during a given time.
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Demand Curve
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A visual representation of the amount of money consumers will pay at all possible prices.
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Factors of Demand
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Factors other than the price of a good or service that change (shift) the demand schedule, causing consumers to buy more or less at every price.
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Related goods Income Preferences Expectations Number of Buyers
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Factors/Shifters of Demand
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Price
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The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or service.
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Surplus
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When the supply of a good or service is more than what is demanded. OR when the price of a product is above equilibrium.
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Shortage
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When the amount demanded of a good/service is less than what is supplied. OR when the price is lower than equilibrium.
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Shortage
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When the quantity supplied is less than the quantity demanded due to the price of a good or service being below equilibrium.
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Surplus
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When the quantity supplied is more than the quantity demanded due to the price of a good or service being above equilibrium.
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Government policies, Technology,
Weather,
Number of sellers,
Price of related goods
Cost of inputs,
Future expectations
Weather,
Number of sellers,
Price of related goods
Cost of inputs,
Future expectations
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Factors/Shifters of Supply
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Law of Supply
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As the market price of a good increases (the amount it sells for), producers will increase the quantity produced and vice versa.
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