Questions and Answers
What does the term ceteris paribus mean?
Which of the following would cause a shift in the demand curve from point A to point B?
What is a demand schedule?
A table showing the relationship between the price of a product and the quantity of the product
What is quantity demanded?
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What is a demand curve?
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What is market demand?
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What is the law of demand?
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What is a normal good?
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What is an inferior good?
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What conditions define a perfectly competitive market?
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What are substitute goods?
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What are complements?
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What is the law of supply?
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What is a supply schedule?
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What is quantity supplied?
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What is a supply curve?
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What is market equilibrium?
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An increase in supply decreases the equilibrium price. The decrease in price increases demand.
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Study Notes
Economic Terms and Definitions
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Ceteris Paribus: Latin term meaning "all else equal," used in economic analysis to isolate the effects of one variable while holding others constant.
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Demand Curve Shift: Transition from point A to point B on a demand curve due to various factors, including changes in consumer preferences, income, or prices of related goods.
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Demand Schedule: A structured table illustrating the relationship between product price and the quantity demanded by consumers at various price points.
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Quantity Demanded: The specific amount of a good or service that consumers are willing and able to purchase at a set price.
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Demand Curve: A graphical representation of the relationship between the price of a product and the total quantity demanded, typically downward sloping.
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Market Demand: The total demand for a good or service aggregating the preferences of all consumers within a market.
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Law of Demand: Economic principle stating that, with everything else held constant, when product prices decrease, the quantity demanded increases, and vice versa.
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Normal Goods: Products for which demand rises with an increase in consumer income and falls when income decreases.
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Inferior Goods: Products whose demand increases when consumer income decreases and declines when income rises.
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Perfect Competition: Market structure characterized by numerous buyers and sellers, identical products sold by all firms, and no entry barriers for new competitors.
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Substitute Goods: Goods or services that fulfill similar needs or purposes, allowing consumers to switch from one to another based on price changes.
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Complements: Products or services that are consumed together, where the consumption of one enhances the use of the other.
Supply Concepts
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Law of Supply: Economic rule indicating that, all else being constant, an increase in the price of a product leads to an increase in the quantity supplied, while a decrease in price results in a decreased quantity supplied.
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Supply Schedule: A table that demonstrates the relationship between the price of a product and the quantity supplied across different price levels.
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Quantity Supplied: The specific amount of a good or service that a supplier is willing and able to offer at a certain price.
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Supply Curve: A graphical illustration depicting the relationship between the price of a product and the quantity supplied, typically upward sloping.
Market Dynamics
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Market Equilibrium: A state where the quantity demanded by consumers matches the quantity supplied by producers, resulting in a balanced market.
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Impact of Supply Increase: An increase in supply typically results in a decrease in equilibrium price; however, price changes influence quantity demanded, not the demand curve itself.
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Description
Test your knowledge with these flashcards covering key concepts from Chapter 3 of your economics course. Each card features a term and its definition, helping you grasp essential economic principles such as ceteris paribus and the demand curve. Perfect for review and preparation for exams.