Law of Demand
This economic principle states that as the price of a good or service increases, the quantity demanded generally decreases.
What is the law of demand?
This is the general relationship between the price of a good and the quantity supplied.
What is a direct relationship?
Consumers want one thing one day, and another thing the next. This factor that can shift demand is based on the idea that consumers are fickle and change their minds often.
What is a change in consumer taste and preferences?
This factor that can shift supply centers around the idea that if it becomes cheaper to produce a particular product, more of those products will be produced. In the same way, if it becomes more expensive to produce a particular product, less of those products will be produced.
What are changes in the factors of production?
What is scarcity?
This could happen if you price your items too high.
What is "not selling enough?"
When the price of a good rises, producers are typically willing to do this.
What is produce more?
This factor that can shift demand centers around the idea that as goods are sold in more markets around the world, demand increases.
What is a change in market size?
This factor that can shift supply relates to how advances in technology can lower production costs of goods and services, which increases supply.
What are changes in technology?
The level of output where the quantity supplied exactly equals the quantity demanded.
What is equilibrium?
This could happen if you price your items too low.
What is selling out/selling too much?
According to the law of supply, when the price of a good decreases, producers tend to do this.
What is produce less?
This factor that can shift demand centers around the idea that as people make more money, the demand for most products and services will increase.
What is a change in income?
This factor that can shift supply relates to the fact that as more sellers enter the market, supply will increase.
What are changes in competition?
A legally imposed price limit preventing the price from going below that level.
What is a price floor?
When the price of a good falls, the quantity demanded typically does this.
What is increase?
This is the term for the amount of a good or service that producers are willing to sell at various prices.
What is supply?
This factor that can shift demand centers around the idea that an increase in demand of one product that is closely related to the original product, can increase the demand for the original product.
What are prices of related products?
This factor that can shift supply centers on the idea that governments can pass laws that impact supply and demand. For example, a maker of solar panels might increase supply after the government passes tax incentives that will give consumers a tax break if they buy solar panels.
What are changes in government policy/regulations?
In economics, this refers to the number of units of excess supply.
What is a surplus?
This is the general relationship between the price of a good and the quantity demanded.
What is an inverse relationship?
This term describes the graphical representation of the relationship between the price of a good and the quantity supplied.
What is the supply curve?
This factor that can shift demand centers around the idea that consumers may expect that certain products will become unavailable soon, so it drives people to buy more of those products. An example of this is when people bought more toilet paper during COVID because they thought they wouldn't have enough.
What are changes in expectations?
This factor that can shift supply relates to the idea that weather, natural disasters, or pandemics can increase or decrease supply.
What are natural events?
A mandatory maximum price that a seller can charge for a good or service.
What is a price ceiling?