2.1 Equilibrium

Where buyers and sellers come to negotiate the exchange of a good/service.

The amount of a good/service that consumers are willing and able to buy in a given market at a certain price.

As the price of the product decreases, the quantity demanded increases ceteris paribus

The factors other than price of a product that affect the amount of a product that consumers are willing and able to buy.

A product for which demand increases when income increases.

A product for which demand decreases when income increases.

Goods that are consumed in place of each other; so as the demand for one increases the others demand decreases.

Goods that a consumed with each other; so as the demand for one increases so does the demand for the other.

What consumers can buy with their income.

The satisfaction gained by a consumer from buying 1 additional unit of a good.

The more of a product consumers buy, the less satisfaction they will get from consuming additional units.

The amount of a good/service that firms are willing and able to produce in a given market at a given price.

As price of a product increases, the quantity supplied increases ceteris paribus.

Factors other than the price affecting the amount of a good that firms are willing and able to produce.

Goods that are produced in place of each other; so increasing the supply of one means decreasing the supply of the other.

Goods that are produced with each other; so as the supply of one increase so does the other.

Occurs when there is a state of rest in the market, no incentive to change product’s price, where D=S, quantity Q is bought and sold at price P.

Occurs when quantity supplied is greater than quantity demanded.

Occurs when quantity demanded is greater than quantity supplied.

Process where firms decide how to allocate resources based on changes in price.