Law and Definition
This is the willingness and ability of buyers to purchase a good or service at various prices.
What is demand?
When consumer tastes and preferences change, causing them to suddenly want more of a product.
What is a shift in demand?
A technological improvement that lowers the cost of production would cause the supply curve to shift in this direction.
What is to the right (an increase)?
When the quantity supplied is greater than the quantity demanded, causing prices to fall.
What is a surplus?
The price of lumber increases dramatically, causing the supply of new houses to decrease. The equilibrium price will go up and the equilibrium quantity will go down.
What is a decrease in supply?
This economic law states that, all else being equal, the quantity demanded decreases as price increases.
What is the Law of Demand?
If a consumer's income rises, they may have a higher demand for normal goods, which is an example of this kind of shift.
What is an income effect?
An increase in the cost of resources or raw materials would cause the supply curve to shift this way.
What is to the left (a decrease)?
When the quantity demanded is greater than the quantity supplied, causing prices to rise.
What is a shortage?
A new study reveals that eating chocolate is very healthy, causing demand for chocolate to increase. The equilibrium price and quantity will both rise.
What is an increase in demand?
The willingness and ability of producers to sell a good or service at different prices.
What is supply?
If the price of a substitute good, like Pepsi, decreases, the demand for Coke would shift in this direction.
What is to the left (a decrease)?
A government payment to a company that encourages production would cause the supply curve to shift right.
What is a subsidy?
This is the price at which the quantity demanded is equal to the quantity supplied.
What is the equilibrium price?
After the release of a new, popular video game console, the demand for the previous model decreases. What effect will this have on the equilibrium price and quantity of the old console?
What is a decrease in both equilibrium price and quantity?
According to this law, the quantity supplied will increase as the price of a good or service increases.
What is the Law of Supply?
An increase in the number of buyers, such as a rising population, has this effect on the demand curve.
What is a rightward shift?
A natural disaster that destroys crops would cause this effect on the supply curve for agricultural goods.
What is a leftward shift?
In a market graph, this is the name for the amount bought and sold at the equilibrium price.
What is the equilibrium quantity?
Due to a new, automated manufacturing process, the cost of producing cars is significantly reduced. This will likely cause a shift in supply leading to this result.
What is a lower equilibrium price and a higher equilibrium quantity?
This is the point where the supply and demand curves intersect on a graph.
What is market equilibrium?
The expectation that the price of a good will increase in the future, causing a change in current consumer demand.
What are consumer expectations?
This factor is when producers expect the price of their product to rise in the future, possibly decreasing their current supply.
What are producer expectations?
If both the supply and demand for a product increase, the equilibrium quantity will definitely rise, but this market variable is indeterminate.
What is the equilibrium price?
A new musical artist becomes very popular, and the price of their concert tickets rises dramatically. This is an example of what happening in the market?
What is an increase in demand with a limited or inelastic supply?