Supply and Demand
What is Demand
The willingness and ability of consumers to buy goods.
What is equilibrium?
The point where quantity demanded equals quantity supplied.
What is elasticity of demand?
How responsive consumers are to price changes.
What is the Law of Demand?
When price increases, quantity demanded decreases.
What is a surplus?
A situation where quantity supplied is greater than quantity demanded.
What is elastic demand?
Demand that changes a lot when price changes.
What is the Law of Supply?
When higher prices cause producers to sell more.
What is a shortage?
A situation where quantity demanded is greater than quantity supplied.
What is inelastic demand?
Demand that does not change much when price changes.
What are production costs (input costs)?
Costs like labor and materials that affect supply.
What is a price ceiling?
A government-set maximum price below equilibrium.
What is the elasticity formula?
% change in quantity demanded ÷ % change in price.