DEMAND‑ING TERMS
More of an item is demanded at a lower price, less at a higher price.
What is the law of demand?
Always changing trends and what’s ‘in’ or ‘out’ that affect demand
What are consumer tastes?
The cost of raw materials used to make a product.
What are input costs?
How much producers are willing and able to sell at various prices.
What is supply?
When quantity supplied matches quantity demanded.
What is equilibrium?
A graph line that slopes downward, showing quantities demanded at different prices
What is demand curve?
People’s beliefs about current and future events that alter buying habits.
What are consumer expectations?
A new technology allows a company to produce twice as fast.
What are efficiencies?
A graph line that slopes upward, showing quantities supplied at different prices.
What is supply curve?
At the current price, customers want more than producers can provide.
What is a shortage?
You buy a second slice of pizza but enjoy it less than the first. This concept explains this phenomenon.
What is diminishing marginal utility?
The number of customers and potential customers available to demand an item
What is the pool of customers?
Government rules that increase the cost of producing certain goods.
What are regulations?
A factory adds more workers, but each additional worker increases output less than the previous one.
What is diminishing marginal return?
At the current price, producers supply more than customers want.
What is a surplus?
A price drop makes you feel like your income went further, so you buy more even though your paycheck didn’t change.
What is the income effect?
A product that must be used in conjunction with another product, like mustard on a hot dog.
What is a compliment?
A company can quickly switch from producing T‑shirts to producing hats with minimal cost.
What is easy switching production?
A drought raises the cost of raw materials, causing producers to supply less at every price.
A small price increase causes a large drop in quantity demanded.
What is elastic demand?
A celebrity suddenly endorses a product, causing people to buy more at every price point. The entire graph shifts.
What is a change in demand?
A price increase for one brand of cereal causes shoppers to switch to a cheaper competitor.
What is substitute?
After analyzing how to maximize efficiency and profitability, a company builds a new factory to expand output, but the change takes years. This is know as ______ type of production.
What is long-run?
A new machine cuts production time in half, shifting the entire supply curve to the _________.
What is the right?
A product’s quantity supplied barely changes even when price rises sharply.
What is inelastic supply?