Macroeconomics

demand curve (definition and what does it look like)

a downward sloping line representing price and quantity demanded

supply shift to the left

decrease in supply

market supply

is the sum of the supplies of all sellers.

market demand

the sum of all the individual demands for a particular good or service.

demand curve shift to the left

decrease in demand (quantity)

equilibrium quantity

the quantity at the intersect

perfectly competitive (2 traits)

(1) the goods offered for sale are all exactly the same, and (2) the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price.

market

A market is a group of buyers and sellers of a particular good or service.

shortage of a good

Demanders are unable to buy all they want at the going price; excess demand

number of sellers (supply variable)

If Ben or Jerry were to retire from the ice-cream business, the supply in the market would fall.

normal good

If the demand for a good falls when income falls

inferior good

If the demand for a good rises when income falls

law of demand

Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises.

law of supply

Other things equal, when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well. dependable factor

surplus of a good

Suppliers are unable to sell all they want at the going price; excess supply

law of supply and demand

The price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance.

complements

When a fall in the price of one good raises the demand for another good, the two goods are called

substitutes

When a fall in the price of one good reduces the demand for another good, the two goods are called

monopoly

a market in which there are many buyers but only one seller

competitive market

a market in which there are so many buyers and so many sellers that each has a negligible impact on the market price.

demand schedule

a table that shows the relationship between the price of a good and the quantity demanded, holding constant everything else that influences how much of the good consumers want to buy.

supply schedule

a table that shows the relationship between the price of a good and the quantity supplied, holding constant everything else that influences how much producers of the good want to sell.

quantity demanded

amount of the good that buyers are willing and able to purchase

quantity supplied

amount that sellers are willing and able to sell

technology (supply variable)

better tech raises supply of product

equilibrium

demand and supply curves intersect

number of buyers (Variable to demand curve)

determines demand of a certain market by the quantity of buyers interested. shifts

expectations (Variable to demand curve)

expectations about the future. like a raised income. shifts.

expectations (supply variable)

if a firm expects the price of ice cream to rise in the future, it will put some of its current production into storage and supply less to the market today.

demand curve shift to the right

increase in demand (quantity)

input prices (supply variable)

increase in input prices = decrease in product output

supply curve shift to the right

increase in supply

tastes (Variable to demand curve)

preference of a certain good. shifts.

market clearing price

same as equilibrium price

supply curve (direction?)

slopes upward because, other things equal, a higher price means a greater quantity supplied.

equilibrium price

the price at the intersect