BackMacroeconomics: Chapter 3
Terms in this set (20)
Demand is a schedule showing how much of a good or service people will purchase at different prices during a specified time period, holding other factors constant.
The law of demand states there is an inverse relationship between price and quantity demanded: when price rises, quantity demanded falls, and when price falls, quantity demanded rises, ceteris paribus.
Factors held constant include income, tastes and preferences, prices of other goods, and many other factors.
Relative price is the price of a commodity in terms of another commodity. Money price is the price observed in today's dollars (nominal price).
A demand schedule is a table relating prices to quantities demanded over a time period, considering constant-quality units.
A demand curve is a graphical representation of the demand schedule, showing a negatively sloped line indicating the inverse relationship between price and quantity demanded.
Market demand is the total demand of all consumers for a particular good or service, found by summing individual quantities demanded at each price.
Changes in income, tastes and preferences, prices of related goods, expectations, and market size cause the entire demand curve to shift left or right.
Normal goods have demand that rises as income rises. Inferior goods have demand that falls as income rises.
Substitutes cause demand for one good to rise when the price of another rises. Complements cause demand for one good to fall when the price of another rises.
A change in demand shifts the entire demand curve due to factors other than price. A change in quantity demanded is a movement along the same demand curve caused by a change in the good's own price.
Supply is a schedule showing the relationship between price and quantity supplied over a specified time period, holding other factors constant.
The law of supply states that higher prices lead sellers to offer more of a good, and lower prices lead to less quantity supplied, ceteris paribus.
A supply schedule is a table relating prices to quantities supplied. A supply curve is a positively sloped graph showing the direct relationship between price and quantity supplied.
Changes in technology, input prices, price expectations, taxes and subsidies, and the number of sellers cause the supply curve to shift.
A change in supply shifts the entire supply curve due to factors other than price. A change in quantity supplied is a movement along the supply curve caused by a change in the good's own price.
The equilibrium price is the market-clearing price where quantity demanded equals quantity supplied, with no surplus or shortage.
A shortage occurs when quantity demanded exceeds quantity supplied at a given price, typically below the equilibrium price.
A surplus occurs when quantity supplied exceeds quantity demanded at a given price, typically above the equilibrium price.
Apps help hospitals and nurses reach equilibrium faster by adjusting schedules to match fluctuating demand, reducing surpluses and shortages in nursing services.