Basic Concepts
The amount of a good producers are willing to sell at various prices.
Supply
A decrease in production costs causes this to the supply curve.
Rightward shift
Mustard is considered a _______ to hotdogs.
complement
This occurs when quantity supplied exceeds quantity demanded.
Surplus
This government policy increases production costs
Tax
This is the desire and ability to purchase a good at various prices.
Demand
If the price of Pepsi increases, what do you think will happen to the demand for Coke?
Increase. This is because Pepsi and Coke are considered substitute goods.
Butter and Margarine often considered as ______
Substitutes
This occurs when quantity demanded exceeds quantity supplied.
Shortage
This financial assistance from the government lowers production costs and increases supply.
Subsidy
The price of a good in dollar terms.
Money price
A graphical representation of the law of supply.
Supply curve
Organic food, luxury cars, houses, electronics are examples of _______
Normal good
The point where the supply and demand curves intersect.
market equilibrium
A tax on sellers causes the supply curve to shift in this direction.
Left or upward
The price of a good measured in terms of another good.
Relative price
The increase of ice cream demand in summer relates to __________.
Shifts in demand
Generic food, discount items, store brand goods are examples of _______
inferior good
It clears the market of all excess quantities demanded or supplied.
market clearing price
A subsidy causes the supply curve to shift in this direction.
right or downward
The number of potential buyers
Market size
This is the largest factor in determining demand.
Price
This term means "all other things held constant" in economic models.
ceteris paribus
The only stable price and the market price tends to gravitate toward it.
Equilibrium price
This type of price control is meant to protect consumers from high prices.
price ceiling