Macro Study Guide - Exam 1.docx - Supply Demand Chp 3(Ceteris Paribus All else equal Law wheh the price of a product falls the quantity demanded

Macro Study Guide - Exam 1.docx - Supply Demand Chp...

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Supply & Demand Chp. 3 (Ceteris Paribus; All else equal) Law: wheh the price of a product falls, the quantity demanded increases Demand Schedule: A table demonstrating the relationship between price of a product and Qd Demand v Quantity demanded: shift vs price An inferior good : Demand decreases when income increases A normal good : Demand increases when income increases Substitute goods : goods that can act as an alternate if desired product in unavailable Complimentary goods : goods that help another product Input : cost of producing Surplus (Qs>Qd)=Supply – Demand at market price Shortage (Qd>Qs)=Demand-Supply Equilibrium = Demand equals supply if supply increases , equilibrium price will decrease while Qs increases if demand increases , price and Qd increases Law supply: when the price of a product increases, the quantity supplied increase Supply vs quantity supplied: quantity willing to be provided at mkt price vs supply curve Supply curve unchanged Supply curve shifts right Supply curve shifts left Demand curve unchanged Q unchanged P unchanged Q increases
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