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Contents

Supply

Terms

Summary and Introduction to Supply

Supply

Aggregate Demand  -  The combined demand of all buyers in a market.
Aggregate Supply  -  The combined supply of all sellers in a market.
Buyer  -  Someone who purchases goods and services from a seller for money.
Competition  -  In a market economy, competition occurs between large numbers of buyers and sellers who vie for the opportunity to buy or sell goods and services. The competition among buyers means that prices will never fall very low, and the competition among sellers means that prices will never rise very high. This is only true if there are so many buyers and sellers that none of them has a significant impact on the market equilibrium.
Demand  -  Demand refers to the amount of goods and services that buyers are willing to purchase. Typically, demand decreases with increases in price, this trend can be graphically represented with a demand curve. Demand can be affected by changes in income, changes in price, and changes in relative price.
Equilibrium Price  -  The price of a good or service at which quantity supplied is equal to quantity demanded. Also called the market-clearing price.
Equilibrium Quantity  -  Amount of goods or services sold at the equilibrium price. Because supply is equal to demand at this point, there is no surplus or shortage.
Firm  -  Unit of sellers in microeconomics. Because it is seen as one selling unit in microeconomics, a firm will make coordinated efforts to maximize its profit through sales of its goods and services. The combined actions and preferences of all firms in a market will determine the appearance and behavior of the supply curve.
Goods and Services  -  Products or work that are bought and sold. In a market economy, competition among buyers and sellers sets the market equilibrium, determining the price and the quantity sold.
Horizontal addition  -  The process of adding together all quantities demanded at each price level to find aggregate demand
Household  -  Unit of buyers in microeconomics. Because it is seen as one buying unit in microeconomics, a household will make coordinated efforts to maximize its utility through its choices of goods and services. The combined actions and preferences of all households in a market will determine the appearance and behavior of the demand curve.
Market  -  A large group of buyers and sellers who are buying and selling the same good or service.
Market Economy  -  An economy in which the prices and distribution of goods and services are determined by the interaction of large numbers of buyers and sellers, none of whom have a significant individual impact on prices or quantities.
Market Equilibrium  -  Point at which quantity supplied and quantity demanded are equal, and prices are market-clearing prices, leaving no surplus or shortage.
Market-Clearing Price  -  The price of a good or service at which quantity supplied is equal to quantity demanded. Also called the equilibrium price.
Profit  -  Actual amount that a firm makes from selling a good. Is equal to Total Revenue (TR) - Total Cost (TC).
Seller  -  Someone who sells goods and services to a buyer for money.
Supply  -  Supply refers to the amount of goods and services that sellers are willing to sell. Typically, supply increases with increases in price, this trend can be graphically represented with a supply curve.
Supply Curve  -  A supply curve is the graphical representation of the relationship between quantities of goods and services that sellers are willing to sell and the price of those goods and services.
Total Cost  -  All of the money a firm has to pay in order to be able to sell its products. Includes total variable costs and total fixed costs.
Total Revenue  -  All of the income a firm makes from selling its products. Is equal to price per unit times quantity sold, (P)x(Q).
Utility  -  An approximate measure for levels of "happiness."
Wage  -  Price per unit of time when the good being sold is some form of labor or work (instead of a physical product).

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