Demand Basics
The quantity of a good that consumers are willing and able to buy at each price.
demand
The quantity of a good producers are willing and able to offer for sale at different prices.
supply
A line that shows the quantities of a good demanded at different prices; it slopes downward.
demand curve
The point where quantity supplied equals quantity demanded.
A maximum legal price set by the government.
price ceiling
The economic principle that quantity demanded and price move in opposite directions.
law of demand
The economic principle that quantity supplied and price usually move in the same direction.
law of supply
A curve that shows the quantities of a good supplied at different prices and moves upward.
supply curve
A situation in which quantity supplied is greater than quantity demanded.
surplus
A minimum legal price set by the government.
price floor
Goods like peanut butter and jelly, which are used together.
complements
A cost that stays the same regardless of how much is produced.
fixed cost
A change in quantity demanded that results from a change in price.
movement along the demand curve
A situation in which quantity demanded is greater than quantity supplied.
shortage
Give an example of a government-imposed price floor in the real world.
minimum wage
A product or service that can be used in place of another, such as coffee instead of tea.
substitute
A cost that changes depending on how much is produced.
variable cost
A change in quantity supplied that results from a change in price.
movement along the supply curve
The change in total revenue a business earns from selling one more unit of a product.
marginal revenue
New technology in cars helps the supply curve for cars to shift in this direction.
right
The idea that as a person consumes more units of a good, the extra satisfaction from each unit decreases.
law of diminishing marginal utility
The change in total cost from producing one more unit.
marginal cost
A change in supply or demand caused by something other than price, which moves the entire curve.
shift of a curve
The economic concept that describes when additional units of a resource lead to a smaller increase in output.
law of diminishing returns
The closing of a town's only grocery store causes the supply curve for groceries to shift in this direction.
left