Law of Demand: economic rule which states that the quantity demanded, and price move in opposite directions As price goes, quantity demanded goes
Law of Supply: Economic rule which states that an increase in supply leads to a decrease in price while a decrease in supply leads to an increase in price.
Rule stating that the additional satisfaction a consumer gets from purchasing one or more units of a product will be less with each one purchased Ex: $ 15.00 for a CD, if you have money for one you will buy a least one. Buying additional CDs depends on the satisfaction you expect from buying other CDs. You will have high satisfaction from owning more CDs.
Rule stating that individuals cannot keep buying the same quantity of a product if its price rises and their income stays the same Ex: Groceries, Gasoline Also works in reverse If price decreases and income remains the same, purchasing power is increased, consumer will likely buy more of the product
The economic principle stating that if two items satisfy the same need and the price of one rises, people will buy the other Ex: CDs and iTunes Albums
What is a demand curve? A line plotted on a graph showing the quantity demanded of a good or service at each possible price Draw example from board on your notes Pay special attention to where price and quantity are located on the graph
What is a supply curve? A line plotted on a graph that shows the quantities supplied of a good or service at each possible price Draw example from the board on your notes Pay special attention to where the price and quantity are located on the graph
Shortage- Quantity demanded is greater than the quantity supplied Examples- Wii and Xbox were introduced Surplus- When supply is greater than demand Examples- As seen on TV products
Price of a product or service at which the amount producers are willing to supply is equal to the amount consumers are willing to buy On a graph it is where the supply and demand curves intersect Copy down graph from the board. Pay attention to where price and quantity are located. Circle where the two intersect
Complimentary goods- raw goods that are related in an inverse fashion to other goods Examples- Gas/Oil, Peanut Butter/Jelly Substitute goods- Goods that are in competition. Examples- Butter/Margarine Both types of goods are in a direct relationship.