H Econ: Unit 2 Vocab

Demand

willing and able to purchase at every/all prices

Law of Demand

as price goes up, quantity demanded goes down (inversely related)

Change in Q-Demanded

only changed by a change in price (demand)

Change in Demand

caused by the determinants of demand

Substitute

when the price of the original goes up, the demand of this good goes up

Complement

when the price of one good goes up, the demand of this related good decreases

Supply

willing and able to sell at any/all prices

Law of Supply

as price goes up, quantity supplied goes up (direct relationship)

Quantity Supplied

willing and able to sell at one (1) price

Change in Q-Supplied

only changed by a change in price (supply)

Change in Supply

caused by the determinants of supply

Subsidy

additional payment from the government for producing a good; increases supply

Equilibrium Price

price where equilibrium occurs

Equilibrium Quantity

quantity where equilibrium occurs

Surplus

when Q-supplied is greater than Q-demanded; when Q-demanded is less than Q-supplied

Shortage

when Q-supplied is less than than Q-demanded; when Q-demanded is more than Q-supplied

Price Ceiling

sets a maximum price that is allowed

Price Floor

sets a minimum price that is allowed

Perfect Competition

An ideal type of market structure where all producers and consumers have full and symmetric information and no transaction costs. There are a large number of producers and consumers competing with one another in this kind of environment.

Monopolistic Competition

when many companies offer competing products or services that are similar, but not perfect, substitutes

Non-price competition

a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship"

Oligopoly

a competitive situation in which there are only a few sellers (of products that can be differentiated but not to any great extent); each seller has a high percentage of the market and cannot afford to ignore the actions of the others

Collusion

a non-competitive, secret, and sometimes illegal agreement between rivals which attempts to disrupt the market's equilibrium

Monopoly

the exclusive possession or control of the supply of or trade in a commodity or service

Sole Proprietorship

a business owned by one person, who has all the control, liability, and gets all the profit from the business

Unlimited Liability

A company that involves general partners and sole proprietors who are equally responsible for all debt and liabilities accrued by the business

Partnership

a business owned by 2 or more people, who split the control, liability, and profit from the business

Corporation

a business entity that is owned by its shareholder(s), who elect a board of directors to oversee the organization's activities

Stock

a security that represents the ownership of a fraction of the issuing corporation

Dividend

a form of income that shareholders of corporations receive for each share of stock that they hold