Demand
The willingness and ability of buyers to purchase different quantities of goods at different prices.
Demand
The willingness and ability of producers to offer goods or services for sale at various prices.
Supply
Where are goods and services sold?
A Market
A good that is consumed separately from another good but can be used in its place
A maximum price the government allows to be charged for a good or service.
Price Ceiling
This law states that as price increases, quantity demanded decreases, assuming other factors remain constant.
Law of Demand
According to the Law of Supply, when price increases, what happens to quantity supplied?
It increases
The point at which supply equals demand
Equilibrium
A good that is consumed together with another good.
A minimum price the government requires to be paid for a good or service.
Price Floor
A table that shows the relationship between price and quantity demanded.
Demand Schedule
A table showing the quantity of a good that would be supplied at various prices.
Supply Schedule
If quantity supplied is greater than quantity demanded, the market has this.
Surplus
As income rises, demand for this type of good rises.
Normal Good
A price ceiling set below equilibrium can create this condition.
Shortage
This is the graphical representation of the inverse relationship between price and quantity demanded.
Demand Curve
If the supply of a good increases, which way will the supply curve shift?
The right
If quantity demanded is greater than quantity supplied, the market has this.
Shortage
Name two factors that affect the elasticity of demand.
What are the availability of substitutes and whether the good is a necessity?
A price floor set above equilibrium can create this condition.
Surplus
Name two factors other than price that can cause demand to shift.
Income, buyer preference, number of buyers, and expected future prices?
Name three factors that can shift the supply curve.
What are resource prices, technology, taxes, subsidies, and quotas?
A market is currently selling a product for $20. At that price, producers want to sell 1,500 units, but buy 1,000 units.
What market condition exists, and what would need to happen to the price for the market to move toward equilibrium?
No, the market is not at equilibrium. There is a surplus of 500 units, because quantity supplied exceeds quantity demanded. The price would need to decrease to move the market toward equilibrium.
The price of a product increases by 10%; the quantity demanded decreases by 25%. Is the product elastic or inelastic?
Elastic. The quantity demanded changes by a greater percentage than the price, meaning consumers are highly responsive to the price change.
The equilibrium price of an apartment is $2,000 per month. The government sets a price ceiling of $1,500. At $1,500, landlords are willing to supply 800 apartments, but renters want to rent 1,200 apartments. What is the result
It creates a shortage of 400 apartments.