Supply
As price increases what increases with it?
quantity supplied
What does the law of demand state?
as prices fall, people buy more
what happens when there's a shortage?
prices rise until equilibrium is restored
what does a shift demand represent?
a change in overall consumer behavior/conditions
what does it mean when a curve "moves along"?
only the price of the good changes
What causes movement along the supply curve?
a change in the good's own price
The demand curve is an inverse relationship between what two things?
price and quantity demanded
what happens when there is a surplus?
prices fall until equilibrium is restored
what can cause the demand curve to shift right?
increase in income or higher price of a substitute
price adjust balance supply and demand in the market
What are two factors that can shift the supply curve?
changes in tech or production costs
What is the difference between quantity demanded and demand on the demand curve
The quantity demanded is movement along the curve while demand is a shift of the curve
how do price controls affect markets?
what can cause the supply curve to shift left?
increase in production costs or new regulations
Which term describes all other things are constant ex. we assume that nothing but the price changes when looking at something being bought or sold.
ceteris paribus
What does INGEST stand for?
Input, number of sellers, government, expectation, shocks, technology
What does TRIBE stand for?
taste, related, income, buyer, expectations
what is market equilibrium?
the point where quantity supplied equals quantity demanded
what is the effect of new technology on supply?
supply increases (curve shifts right)
A government-imposed limit on how high or low a price can go.
price control
REAL WORLD EXAMPLE: the price for all menu items goes up is this INGEST or TRIBE? Which one specifically?
ceteris paribus
What causes the demand curve to shift?
changes in income, tastes, expectations, or prices of related goods
What is marginal benefit and marginal cost
Benefit is how much you gain by adding another unit while marginal cost is the added cost to produce the next unit
how do substitutes and complements affect demand?
substitutes-- increase in one increases demand for the other; complements-- increase in one decreases demand for the other
As you consume more of a good, the added benefit from each additional unit decreases, like its satisfaction.