demand

Changes in Population

When population increases, opportunities to buy and sell increase. naturally, the demand for most products then increaseses.

price floor

is a government set minimum price that can be charged for goods and services.

price ceiling

is a legal maximum price that may be charged for a particular

supply schedule

is a table showing quantities supplied at different possible prices.

determinants of supply

price of inputs, the number of firms in the industry, taxes, and technology

marginal return

refers to the additional output resulting from a one unit increase in the use of variable inputs, while other inputs are held constant

supply curve

a graph that shows the relationship between price and quantity supplied

Changes in income

the demand for most goods and services depends on income.

Inferior goods

As income decreases, demand increases As income increases, demand decreases

Normal goods

As income increases, demand increases As income decreases, demand decreases

complementary goods

Complements are products that are generally bought and sold together. digital cameras and memory cards are examples of complimentary goods. When two goods are complimentary, the decrease in the price of one will increase the demand for it as well as the complimentary good.

snob effect

People buy an item because others are not buying it. Demand decreases and the demand curve shifts to the left.

changes in tastes & preferences

Tastes and preferences refer to what people like and prefer to choose. when a product becomes a fad, more of the products are demanded and sold at every possible price.

Subsitutes

are goods used in place of one another. the availability and price of substitutes also affect demand.

number of firms in the industry

as more firms enter an industry, greater quantities of their product or service are supplied at every price, and the supply curve shifts to the right.

taxes

if the government imposes more taxes on the production of certain items, businesses will not be willing to supply as much as before because the cost of production will rise.

law of diminishing returns

is an economic rule that says adding units of one factor of production increases total output; however, after a certain point the extra output for each additional unit hired will decrease.

equilibrium price

is defined as the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy

quantity supplied

is the amount of a good or service that a producer is willing and able to supply at a specefic price. there is a direct relationship means that when prices rise, quantity supplied will rise

marginal cost

is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good.

rationing

limiting items that are in short supply

price of inputs

needed to make a product -raw materials, wages, etc.- drops, a producer can supply more at a lower production cost. this causes the entire supply curve to shift to the right.

Bandwagon effect

people buy an item because others are buying it. Demand increases and the demand curve shifts to the right

technology

the use of science to develop new products and new methods for producing and distributing goods and services is called technology

black market

which illegally high prices are charged for items that are in short supply.