Unit 2: Supply and Demand

• market: a place where people come together to buy goods and services--two sides, the "buyer's side" and "the seller's side"
• demand: the willingness and ability of buyers to purchase different quantities of different goods

  
• quantity demanded: the number of units of a good purchased at a specific price
• 5 Factors that Cause the Demand Curve to Shift: income , taste, price of related goods, number of buyers, expectation of future prices
• supply: the willingness and ability of sellers to produce and offer to sell different quantities of goods at different prices during different time periods

  
• law of supply: a law stating that as the price of a good increases, quantity supplied of the good increases and as the price of a good decreases, quantity supplied decreases

  
• 6 Factors that Cause the Supply Curve to Shift: resource prices (inputs), technology, government, number of sellers, future prices, weather
• shortage: when there is not enough of a good, happens when prices are below equilibrium
• surplus: when there is too much of a good, happens when prices are above equilibrium
• price ceiling: the maximum price that a seller can charge

  
• supply schedule: numerical chart that shows quantity supplied and price

  
• demand schedule: numerical chart that shows quantity demanded and price

  
• demand curve 


  graph that shows quantity demanded and price

  
• supply curve 


  graph that show quantity supplied and price

  
• equilibrium price: the price where quantity supplied and quantity demand are equal