1.
A market is any arrangement that brings together the buyers and sellers of a particular good or service.
2.
Demand is the amount of a good or service that a buyer will purchase at a particular price.
3.
The law of demand states that as price increases, other thing being equal, the quantity of the product demanded increases.
4.
The law of diminishing marginal utility is one explanation of why there is an incerse relationship between price and quantity demanded.
5.
The substitution effect suggests that, at a lower price, you have the incentive to substitute the more expensive product for similar products which are relatively less expensive.
6.
The is no difference between individual demand schedules and the market demand schedules.
7.
In graphing supply and demand schedules, supply is put on the horizontal axis and demand on the vertical axis.
8.
If price falls, there will be an increase in demand.
9.
If consumer tastes or preferences for a product decrease, the demand for the product will tend to decrease.
10.
An increase in income will tend to increase the demand for a product.
11.
When two products are substitute goods, the price of one and the demand for the other will tend to move in the same direction.
12.
If two goods are complementary, an increase in the price of one will tend to increase the demand for the other.
13.
A change in the quantity demanded means that there has been a change in demand.
14.
Supply is a schedule that shows the amounts of a product a producer can make in a limited amount of time.
15.
An increase in resource prices will tend to decrease supply.
16.
A government subsidy for the production of a product will tend to decrease supply.
17.
An increase in the prices of other goods that could be made by the producers will tend to decrease the supply of the current good that the producer is making.
18.
A change in supply means that there is a movement along an existing supply curve.
19.
A surplus indicates that the quantity demanded is less that the quantity supplied.
20.
If the market price of a product is below its equilibrium price, the market price will will tend to rise because demand will decrease and supply will increase.
21.
The equilibrium price of a good is the price at which the demand and the supply of the good are equal.
22.
The rationing function of prices is the elimination of shortages and surpluses.
23.
If the supply of a product increases and the demand decreases, the equilibrium price and quantity will increase.
24.
If the demand for a product increases and the supply of the product decreases, the equilibrium price will increase and the equilibrium quantity will be indeterminant.
25.
Economists often make the assumption of other things equal to hold constant the effects of other factors when examining the relationship between prices and quantities demanded and supplied.