Demand schedule

is a table showing how the quantity demanded of same product during a specified period of time changes as the price of that product changes holding all other determinants of quantity demanded constant.

Demand curve

is a graphical depiction of a demand schedule.

Demand Curve

It shows how the quantity demanded of some product will change as the price of that product changes during a specified period of time, holding all other determinants of quantity demanded constant.

Shift in a demand curve

occurs when any relevant variable other than price changes. If consumers want to buy more at any and all given prices than they wanted previously, the demand curve shifts to the right (or outward). If they desire less at any given price, the demand curve shifts to the left (or inward). 1) Consumer Income 2) Population 3) Consumer Preferences 4) Price and availability of related goods 5) Expectations+5 reasons of shift in demand curve

Normal goods

are commodities whose quantity demanded rises when the purchaser's real Income rises, all other things remaining equal. Inferior goods + are commodities whose quantity demanded falls when the purchaser's real income rises, all other things remaining equal

Population growth

affects quantity demanded in more or less the same way as increases in average incomes.

Customer Preference

refers to the specific choices and tastes of consumers when selecting products or services.

Substitutes

are goods that can be used in place of each other. Complements + are goods that are typically used together.

Expectations

of future prices refer to the predictions or beliefs that producers hold about the future prices of their goods or services. These expectations are influenced by factors such as market trends, economic conditions, and government policies.

Quantity supplied

is the number of units that sellers want to sell over a specified period of time.

Supply

refers to the entire range of quantities that producers are willing and able to offer for sale at various prices over a specific period.

Supply schedules

are tables showing how the quantity supplied of some products change as the price of those products change during a specified period of time, holding all other determinants of quantity supplied constant.

Supply curve

is a graphical depiction of a supply schedule. It shows how the quantity supplied of a product will change as the price of that product changes during a specified period of time, holding all other determinants of quantity supplied constant

Shifts of the supply curve

occur when quantities of a product or service supplied change at every given price in response to other economic factors.

. SIZE OF THE INDUSTRY

If more farmers enter the beef industry, the quantity supplied at any given price will increase

TECHNOLOGICAL PROGRESS

refers to the discovery of new and improved methods of producing goods.

PRICE OF INPUTS (Input Prices)

are the costs incurred by businesses to secure the resources necessary for production or service provision.

PRICE OF RELATED OUTPUTS

Sometimes production of one thing also involves the production of other goods.

Equilibrium

is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand —while an under-supply or shortage causes prices to go up resulting in less demand

Shortage and Surplus

FACTORS THAT DRIVES THE MARKET TOWARDS EQULIBRIUM

Shortage

is an excess of quantity demanded over quantity supplied.

Surplus

is an excess of quantity supplied over quantity demanded.

THE LAW OF SUPPLY AND DEMAND

The forces of supply and demand generally push the price toward its equilibirum level, the price at which quantity supplied and quantity demanded are equal.

. SPECULATION

Individuals who engage in speculation deliberately store goods, hoping to obtain profits from future changes in the prices of these goods.

Speculators

sell protection from risk to other people, much as a fire insurance policy offers protection from risk to a homeowner.

Speculators

help to smooth out price fluctuations by purchasing items when they are abundant (and cheap) and holding them and reselling them when they are scarce (and expensive)

Price floors

which set minimum prices, prevent prices from falling to market equilibrium levels.

Price Floor

This leads to a surplus where the quantity supplied exceeds the quantity demanded.

A CAN OF WORMS

The unintended consequences of governmentimposed price controls, such as rent ceilings and price floors.

1. Favoritism and Corruption

When prices are artificially set, shortages or surpluses arise. This creates situations where some people are favored over others in accessing limited goods, leading to potential discrimination and corruption.

2. Unenforceability

Price controls are often difficult to enforce, especially in markets with many sellers. People find ways to circumvent the rules, and the true market price tends to re emerge. However, this evasion comes at a cost, usually borne by consumers in the form of higher prices.

3. Auxiliary Restrictions

To maintain price controls, governments often impose additional regulations, such as limiting who can buy from whom or restricting the entry of new businesses. This creates a complex and rigid system.

4. Reduced Transactions

Price controls, both ceilings and floors, can lead to a decrease in the total number of goods and services exchanged in the market.

5. Misallocation of Resources

When prices are distorted by government intervention, resources are not used efficiently. Businesses may make irrational decisions, and efforts to circumvent controls consume valuable resources.

Complements

are goods that are typically used together.Complements + are goods that are typically used together.