Chapter 4 - Demand, Supply, and Market Equilibrium

supply curve

The ________ shows the marginal cost of production for different quantities produced.

model of demand

The ________ and supply explains how a perfectly competitive market operates.

positive relationship

For a normal good, there is a(n) ________ between consumer income and the quantity consumed.

Consumers

________ buy smaller quantities of an inferior product when their income increases.

equilibrium price

If the ________ and quantity move in opposite directions, the changes were caused by a change in supply.

tastes

The consumers preferences or ________ and advertising that may influence preferences.

Excess supply

________ (sometimes called a surplus) occurs when the quantity supplied exceeds the quantity demanded, meaning that producers are willing to sell more than consumers are willing to buy.

negative relationship

Law of demand: There is a(n) ________ between price and quantity demanded, ceteris paribus.

individual consumer

It shows the relationship between the price and the quantity demanded by a(n) ________, ceteris paribus.

entire package

When two goods are complements, they are consumed together as a package, and a decrease in the price of one good decreases the cost of the ________.

Excess demand

________ (sometimes called a shortage) occurs when, at the prevailing market price, the quantity demanded exceeds the quantity supplied, meaning that consumers are willing to buy more than producers are willing to sell.

equilibrium price

If the ________ and quantity move in the same direction, the changes were caused by a change in demand.

supply curve

The market moves upward along the ________, increasing the quantity supplied.

equilibrium price

If the government sets a maximum price that is less than the ________, the result is a permanent excess demand for the good.

supply curve

The market moves downward along the ________, decreasing the quantity supplied.