Supply and Demand

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

• Income Effect

• Law of Diminishing Marginal Utility

• Substitution Effect

• Variable

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.

• Income Effect

• Substitution Effect

• Law of Supply

• Effective Supply

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

• Law of Demand

• Law of Diminishing Marginal Utility

• Substitution Effect

• Aggregate Supply

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

• Effective Supply

• Law of Supply

• Variable

• Elasticity of Supply

Any factor that can change

• Law of Demand

• Law of Diminishing Marginal Product

• Variable

• Market Supply

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

• Effective Supply

• Industry Supply

• Market or Aggregate Supply

• Law of Diminishing Marginal Utility

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

• Market, Aggregate, or Industry Supply

• Increase in Supply

• Income Effect

• Law of Demand

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

• Increase in Supply

• Decrease in Supply

• Law of Demand

• Elasticity of Supply

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

• Increase in Supply

• Decrease in Supply

• Elasticity of Supply

• Law of Supply

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.

• Law of Diminishing Marginal Product

• Law of Supply

• Increase in Demand

• Scale of Production