Economics-Supply and Demand

According to the LAW OF DEMAND, when the price of an item goes up, the quantity demanded:

FALLS

Equilibrium Price

Price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy.

Substitution Effect

This is the economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other.

Substitutes

When the price of a good is too high for consumers, the look for....

Surplus

Situation in which quantity supplied is greater than the quantity demanded.

Shortage

Situation in which the quantity demanded is greater than the quantity supplied.

Diminish marginal utility refers to the fact that:

Additional satisfaction declines as additional units of an item are purchased

Demand

Amount of a good or service that consumers are willing and able to buy at various possible prices

Elasticity

Economic concept dealing with consumers responsiveness to an increase or decrease in price

Elasticity

Economic concept dealing with consumers' responsiveness to an increase or decrease in price:

Law of Diminishing Returns

Economic rule stating that as more units of a factor of PRODUCTION are added, total output continues to increase, but at a DIMINISHING RATE.

Law of Supply

Economic rule stating that as prices rise, quantity supplied rises also.

Substitution Effect

Economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other.

Law of Diminishing Marginal Utility

Economic rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product declines with each additional unit purchased.

Law of Demand

Economic rule stating that the quantity demanded and price move in opposite directions.

Change in Demand

Increased income or increased population for a town can cause this.

According to the law of supply, HIGHER prices prompt producers to:

PRODUCE MORE

If a competitive market is at equilibrium, and if there is a sudden increase in demand, then a temporary:

Shortage will occur and the price will increase

Inelastic

Situation in where a change in price would not change demand or supply significantly.

Law of Diminishing Returns

Stage of production where output increases at a decreasing rate as more units of variable input are added.

Supply

The amount of a good or service that producers are able and willing to sell at various prices during a specified period of time.

Demand

The amount of a good service that consumers are able and willing to buy at various possible prices during a specific time period...

Price

The quantity demanded of a product is affected by...

Could be said about higher prices in the market place:

They encourage more competitors to enter the market.