Supply and Demand

Front

As additional units of a product are consumed, during a given period of time, the additional satisfaction decreases.

Back

Law of Diminishing Marginal Utility

Front

The change in consumption resulting from a change in real income. The effect increasing or decreasing prices has on the buying power of income (Y), holding income constant.

Back

Income Effect

Front

When consumers react to an increase in a good's price by consuming less of that good and more of other goods. As price of a substitute good rises, the demand for its replacement good rises.

Back

Substitution Effect

Front

The quantity of goods supplied will be greater at a higher price than it will be at a lower price.

Back

Law of Supply

Front

Any factor that can change

Back

Variable

Front

Quantities of a product or service that a firm is willing and able to make available for sale at various prices.

Back

Effective Supply

Front

Total quantity of a product or service that all firms in a market will make available for sale at various prices.

Back

Market, Aggregate, or Industry Supply

Front

A shift to the right in the supply curve across all price levels

Back

Increase in Supply

Front

A shift to the left in the supply curve across all price levels

Back

Decrease in Supply

Front

As more of one unit of input is added to a fixed amount of other inputs, the marginal product decreases. Thus costs per unit are rising, so more price must be gained to cover these costs.

Back

Law of Diminishing Marginal Product