Key Terms
Demand
Relationship between price and quantity a consumer is willing and able to buy at each price.
Price
What a buyer pays per unit. Quantity demanded: the number of units consumers want to buy at a specific price.
Demand schedule
A table showing quantity demanded at a range of prices.
Demand curve
A graph of that relationship; downward sloping; price on vertical axis, quantity on horizontal axis.
Ceteris paribus
All other factors held constant.
Example
Golf clubs and golf balls. Club prices rise, fewer clubs demanded, fewer golf balls demanded.
Complements
Price of complement up = demand for original DOWN.
Supply
Relationship between price and quantity a producer is willing and able to offer for sale at each price.
Inputs (factors of production)
Labor, materials, and machinery used in production.
Supply curve
Shows how quantity supplied changes as price changes, assuming ceteris paribus. Slopes upward left to right (higher pric
Equilibrium
Price and quantity where supply equals demand; where the two curves intersect.
Surplus
Quantity supplied exceeds quantity demanded; price above equilibrium.
Shortage
Quantity demanded exceeds quantity supplied; price below equilibrium.
Event
Consumers shift to digital news; demand for print media falls.
Result
Print circulation falls, price drops.