Law of Supply & Demand
This economic law states that as price increases, quantity decreases (and vice versa)
What is the Law of Demand?
An increase in consumer income for a normal good causes this curve to shift in this direction.
What is to the demand curve and to the right?
A government-imposed legal maximum price that can be charged for a product, such as rent control.
What is a price ceiling?
This form of business organization has a single owner who retains all profits but bears full liability.
What is a sole proprietorship?
A market structure characterized by a single seller, total price control, and extremely high barriers to entry.
What is a monopoly?
This economic law states that as price increases, quantity increases (and vice versa).
What is the Law of Supply?
An increase in the price of raw materials used to produce a good causes this curve to shift in this direction.
What is the supply curve and to the left?
A government-imposed legal minimum price that can be charged for a product, such as minimum wage.
What is a price floor?
Business owners in sole proprietorships and general partnerships face this financial risk, where personal assets can be taken to pay business debts.
What is unlimited liability?
A market dominated by a few large firms selling identical or differentiated products (e.g., cellular network providers).
What is an oligopoly?
The Law of Demand demonstrates an inverse (negative) relationship between these two variables.
What are price and quantity demanded?
If consumer preferences shift away from a product, the new equilibrium price and equilibrium quantity will both do this.
What is decrease (or fall)?
When a price ceiling is set below equilibrium, this condition occurs.
What is a shortage?
This business structure is owned by stockholders and enjoys limited liability, but suffers from double taxation.
What is a corporation?
This market structure features many sellers offering identical products with zero price control and no barriers to entry.
What is pure competition (or perfect competition)?
The Law of Supply demonstrates a direct (positive) relationship between these two variables.
What are price and quantity supplied?
A technological breakthrough that speeds up manufacturing causes this curve to shift this direction, leading to lower price and higher quantity.
What is the supply curve and to the right?
When a price floor is set above equilibrium, this condition occurs because.
What is a surplus?
A business form co-owned by two or more individuals who share decision-making, liability, and profits.
What is a partnership?
Fast food restaurants operate in this market structure characterized by many sellers, low barriers to entry, and heavy product differentiation.
What is monopolistic competition?
According to the Law of Supply, producers offer more of a good at higher prices primarily because of this financial incentive.
What is profit (or higher potential profit)?
Goods used together, like peanut butter and jelly, are called this; an increase in the price of one shifts the this curve for the other this direction.
What are complements (or complementary goods), the demand curve, and to the left?
On a supply and demand graph, a price floor is inefficient if it is set where.
What is below the market equilibrium price?
Corporations have this distinct lifespan feature.
What is unlimited life (or perpetual existence)?
The key distinction between monopolistic competition and pure competition is this strategy used by sellers to make their product seem unique.
What is product differentiation (or non-price competition)?