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