AP Macro Unit 2 Vocab

competitive market

there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good/service is sold

supply and demand model

show how a competitive market works

demand schedule

shows how much of a good/service consumers will be willing and able to buy at different prices

quantity demanded

actual amount of good or service consumers are willing and able to buy at some specific price; shown as a single point in a demand schedule or along a demand curve

demand curve

shows the relationship between quantity demanded and price

law of demand

a higher price for a good/service? all other things being equal, leads people to demand a smaller quantity of that good

change in demand

changed the quantity demanded at any given price

substitute

a rise in the price of one of the goods leads to an increase in the demand for the other good

complements

a rise in price of one of the goods leads to a decrease in the demand of the other good

normal good

when a rise in income increases the demand for a good

inferior good

when a rise in income decreases the demand for a good

individual demand curve

illustrates the relationship between a quantity demanded and price for an individual consumer

quantity supplied

the actual amount of a good/service people are willing to sell at some specific price

supply schedule

shows how much a good/serive producers would supply at different prices

supply curve

shows the relationship between the quantity supplied and the price

law of suppky

other things being equal, the price and quantity supplied of a good are positively related

a change in suppky

changed the quantity supplied at any given time

input

a good/serive that is used to produce another good/service

individual suppky curve

relationship between quantity supplied and price for an individual producer

equilibrium

no individual would be better off doing smth different

equilibrium price

quantity demanded of a good equals the quantity supplied of that good. also called market-clearing price

equilibrium quantity

quantity of good bought and sold when price of quantity demanded equals the quantity supplied of that good

surplus

quantity supplied exceeds the quantity demanded; occurs when price is over equilibrium level

shortage

good/service when the quantity demanded exceeds the quantity supplied; occur when price is below equilibrium level

price control

legal restrictions on how highl or low a market price may go

price ceiling

maximum price sellers are allow to charge for a good/service

price floor

minimum price buyers are required to pay for a good/service

inefficient allocation to consumers

people who want the food badly and are willing to pay high price don’t get it but people who care relatively little about it and willing to pay low price get it

wasted resources

people expend money, effort, and time to cope w shortage caused by price ceiling

inefficiently low quality

sellers offer low quality goods at a low price even though buyers would prefer higher quality at a higher price

black market

goods/services are brought and sold illegally; either bc it is illegal to sell them at all or bc the price charged are legally prohibited by a price ceiling

minimum wage

legal floor on the hourly wage rate paid for a worker’s labor

inefficient allocation of sales among sellers

those who would be willing to sell the good at the lowest price are not always those who manage to sell it

inefficiently high quality

sellers offer high quality goods at a high price, even buyers would prefer a lower quality at a lower price

quantity control

upper limit on the quantity of some good that can be brought or sold

license

gives its owner the right to supply a good/service

demand price

given quantity is the price at which consumers will demand that quantity

supply price

given quantity is the price at which producers will supply that quantity

wedge

the price hair by buyers ends up being higher than that received by sellers

quota rent

difference between the he demand and suppky pride at the quota amount. the earning that accrue to the license hold a from ownership of the right to self good. i don’t yak to the market price of the license when the licenses are trade

deadweight loss

value of forgone mutually beneficial transactions

intermediate price

an increase in supply decrease price while an increase in demand will increase price

disquilibrium

a situation in which a market or economy is not operating efficiently and is in a state of imbalance

determinant of demand

income, price, tastes and preferences, prices of related goods and services, and expectations