Economics: Market Forces and Structures

Occurs when the quantity of a good or service that consumers are willing to buy (demand) equals the quantity that producers are willing to supply.
Represented graphically by the intersection of the demand and supply curves.
Equilibrium price and quantity are determined at this point.

Perfect Competition: Many buyers and sellers, free entry and exit, homogeneous products, and perfect information.
Monopoly: Single seller, barriers to entry, and price maker.
Monopolistic Competition: Many sellers, differentiated products, and non-price competition.
Oligopoly: Few sellers, interdependent decision-making, and non-price competition.

Surplus: Excess supply, where the quantity supplied is greater than the quantity demanded.
- Leads to a decrease in price.
Shortage: Excess demand, where the quantity demanded is greater than the quantity supplied.
- Leads to an increase in price.

Market forces allocate resources efficiently, as prices reflect the opportunity costs of production.
Resources are allocated to their most valuable uses, as firms respond to price signals.

Measures how responsive the quantity demanded or supplied is to a change in price.
Elastic: A small price change leads to a large quantity change.
Inelastic: A large price change leads to a small quantity change.

The quantity of a good or service that consumers are willing and able to buy at a given price level.
Law of Demand: As price increases, quantity demanded decreases, ceteris paribus.

The quantity of a good or service that producers are willing and able to supply at a given price level.
Law of Supply: As price increases, quantity supplied increases, ceteris paribus.

Demand Shift: A change in the demand curve, caused by changes in consumer preferences, income, or prices of related goods.
Supply Shift: A change in the supply curve, caused by changes in production costs, technology, or prices of related goods.

Substitutes: Goods that can be used in place of each other, such as coffee and tea.
- An increase in the price of one good leads to an increase in the demand for the other good.
Complements: Goods that are used together, such as peanut butter and jelly.
- An increase in the price of one good leads to a decrease in the demand for the other good.

Equilibrium occurs when the quantity demanded equals the quantity supplied, resulting in no excess supply or demand.
Graphically represented by the intersection of the demand and supply curves, determining the equilibrium price and quantity.

Perfect Competition: Characterized by many buyers and sellers, free entry and exit, homogeneous products, and perfect information.
Monopoly: Single seller, barriers to entry, and price maker, resulting in a single firm supplying the entire market.
Monopolistic Competition: Many sellers, differentiated products, and non-price competition, leading to advertising and product differentiation.
Oligopoly: Few sellers, interdependent decision-making, and non-price competition, resulting in strategic interactions among firms.

Surplus: Excess supply, where the quantity supplied exceeds the quantity demanded, leading to a decrease in price.
Shortage: Excess demand, where the quantity demanded exceeds the quantity supplied, leading to an increase in price.

Market forces allocate resources efficiently, as prices reflect the opportunity costs of production.
Resources are allocated to their most valuable uses, as firms respond to price signals.

Measures the responsiveness of quantity demanded or supplied to a change in price.
Elastic: A small price change leads to a large quantity change, indicating high responsiveness.
Inelastic: A large price change leads to a small quantity change, indicating low responsiveness.

The quantity of a good or service that consumers are willing and able to buy at a given price level.
Law of Demand: As price increases, quantity demanded decreases, ceteris paribus, illustrating the inverse relationship between price and quantity demanded.

The quantity of a good or service that producers are willing and able to supply at a given price level.
Law of Supply: As price increases, quantity supplied increases, ceteris paribus, illustrating the direct relationship between price and quantity supplied.

Demand Shift: A change in the demand curve, caused by changes in consumer preferences, income, or prices of related goods.
Supply Shift: A change in the supply curve, caused by changes in production costs, technology, or prices of related goods.

Substitutes: Goods that can be used in place of each other, such as coffee and tea, where an increase in the price of one good leads to an increase in the demand for the other good.
Complements: Goods that are used together, such as peanut butter and jelly, where an increase in the price of one good leads to a decrease in the demand for the other good.