Economics Units 4 & 5 - Supply & Demand

Demand Schedule

• A listing showing the quantity demanded at all possible prices that might prevail in a market at a given time.
• A graph showing the various quantities supplied at all possible prices that might prevail in the market.
• Demand is elastic when a change in price causes a relatively larger change in quantity demanded.
• Extra revenue from the sale of one additional unit of output.

Demand Curve

• Goods that are related such that an increase in the price of one leads to a decrease in the demand for the other.
• A graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time.
• The principle that more will be offered for sale at higher prices than at lower prices.
• The total output or total product the business needs to sell in order to cover its total costs.

Law of Demand

• Demand is elastic when a change in price causes a relatively larger change in quantity demanded.
• Rule stating that more will be demanded at lower prices and less at higher prices; an inverse relationship between price and quantity demanded.
• A listing showing the quantity demanded at all possible prices that might prevail in a market at a given time.
• A measure of the degree to which the quantity supplied responds to a change in price.

Marginal Utility

• The amount of a product a producer or seller is willing to offer for sale at various prices in a market at a given time.
• Additional satisfaction or usefulness obtained from acquiring or consuming one or more units of a product.
• Rule stating that more will be demanded at lower prices and less at higher prices; an inverse relationship between price and quantity demanded.
• Demand is inelastic when a given change in price causes a relatively smaller change in quantity demanded.

Income Effect

• The change in quantity demanded because of a change in price that alters consumers’ income.
• An electronic business conducted over the internet, involving the buying or selling of tangible or intangible things.
• The extra cost of producing one additional unit of production.
• A graph showing the various quantities supplied at all possible prices that might prevail in the market.

Substitution Effect

• The extra cost of producing one additional unit of production.
• Goods that are related such that an increase in the price of one leads to a decrease in the demand for the other.
• Extra revenue from the sale of one additional unit of output.
• The change in quantity demanded because of a shift in relative prices, leading consumers to replace more costly items with less costly ones.

Change in Demand

• Changes in consumer income, tastes, the price of substitutes, expectations, and the number of consumers.
• The specific amount offered for sale at a given price, represented as a point on the supply curve.
• Different amounts of a product are demanded at every price, causing the demand curve to shift to the left or right.
• The change in quantity demanded because of a shift in relative prices, leading consumers to replace more costly items with less costly ones.

Complementary Goods

• Goods that are related such that an increase in the price of one leads to a decrease in the demand for the other.
• Demand is unit elastic when a given change in price causes a proportional change in quantity demanded.
• Different amounts of a product are demanded at every price, causing the demand curve to shift to the left or right.
• Production cost that varies as output changes, such as labor or raw materials.

Elastic Demand

• Goods that are related such that an increase in the price of one leads to a decrease in the demand for the other.
• The amount of a product a producer or seller is willing to offer for sale at various prices in a market at a given time.
• Demand is elastic when a change in price causes a relatively larger change in quantity demanded.
• A listing showing the quantity demanded at all possible prices that might prevail in a market at a given time.

Inelastic Demand

• The cost that a business incurs even if the plant is idle and output is zero.
• Demand is inelastic when a given change in price causes a relatively smaller change in quantity demanded.
• Demand is unit elastic when a given change in price causes a proportional change in quantity demanded.
• A listing showing the quantity demanded at all possible prices that might prevail in a market at a given time.