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a visual model of the economy that shows how dollars flow through markets among households and firms
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| Ceteris Parabus, means that all other variables are constant |
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| The price of a good measured in units of currency |
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| The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter |
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| The change in quantity demanded resulting from a change in the price of one good relative to other goods |
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| The change in quantity demanded that results from a change in the consumer's purchasing power (or real income) |
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| Consumer income, prices of substitute and complementary goods, consumer tastes and preferences, consumer speculation, and number of buyers in the market all influence demand |
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a table that shows the relationship between the price of a good and the quantity demanded
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a graph of the relationship between the price of a good and the quantity demanded
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| A good for which higher income increases demand |
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| A good for which higher income decreases demand |
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| Two goods are consumer substitutes if they provide essentially the same utility to consumers |
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| Two goods are consumer complements if they provide more utility when consumed together than when consumed separately |
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| Holding all else equal, when the price of a good rises, suppliers increase their quantity supplied for that good |
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| a table that shows the relationship between the price of a god and the quantity supplied |
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a graph of the relationship between the price of a good and the quantity supplied
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| Costs of inputs, technology and productivity, taxes/subsidies, producer speculation, price of other goods that could be produced, and number of sellers all influence supply |
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| Exists at the point where the quantity supplied equals the quantity demanded[image] |
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Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
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| A situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance. |
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