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Chapter 2 - Coggle Diagram
Chapter 2
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theory of demand
demand is defined as the quantity of a well-defined commodity that consumers are both willing and able to buy at a given price during a given period of time, ceteris paribus
.the demand curve shows the relationship between the price and quantity demanded of a well-defined commodity. It shows us the quantity demanded of a well-defined commodity that consumers are both willing and able to buy at each possible price during a given period of time, ceteris paribus
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law of demand states that in a given time period, the quantity demanded of a product is inversely related to its price, ceteris paribus
derived demand describes a market in which a good is demanded not for its own sake but for the purpose of producing another good. In other words, the demand for the good is derived from the demand for another good
theory of supply
supply is defined as the quantity of a well-defined commodity that producers are both willing and able to supply at a given price during a given period of time, ceteris paribus
supply curve shows the relationship between the price and quantity supplied of a well-defined commodity. It shows us the quantity supplied of a well-defined commodity that producers are both willing and able to sell at each possible price during a give period of time, ceteris paribus
law of supply states that in a given time period, the quantity supplied of a product is directly related to its price, ceteris paribus
the price mechanism
describes the means by which various decisions are made by consumers and firms interacting to determine the allocation of scarce resources between competing uses
prices used as signals to reflect what is relatively scarce or abundant, provides information on what should be bought or produced
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producer surplus is the difference between the price that producers in the market are prepared to sell their good or service and how much they actually receive
consumer surplus is the difference between of how much consumers in the market are prepared to pay and how much they actually pay