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Demand
The desire to own something and the ability to buy it.
Law of Demand
Consumers will buy more of a good when its price is lower and less when its price is higher.
Substitutes
Goods that are used in place of one another.
Demand Schedule
A table that lists the quantity of a good that a person will purchase at various prices in a market.
Market Demand Schedule
A table that lists the quantities demanded of a good at various prices by all consumers in the market.
Ceteris Paribus
A Latin phrase that means 'all other things held constant.'
Inferior Goods
A good that consumers demand less of when their incomes increase.
Complements
Two goods that are bought and used together.
Demand Elasticity
How sensitive a product's demand is based on price.
Inelastic
Describes demand that is not very sensitive to price changes.
Total Revenue
The total amount of money a company receives by selling goods and services.
Supply
The amount of a good or service that is available.
Law of Supply
Producers offer more of a good or service as its price increases and less as its price falls.
Supply Schedule
A chart that lists how much of a good or service a supplier will offer at various prices.
Supply Curve
A chart that lists how much of a good or service a supplier will offer at various prices.
Profit
The amount of money a business receives in excess of its expenses.
Elasticity of Supply
A measure of the way quantity reacts to a change in price.
Marginal Product of Labor
The change in output that results from hiring one additional unit of labor.
Increasing Marginal Return
The level of production in which the marginal product of labor increases as the number of workers increases.
Diminishing Marginal Return
The level of production in which the marginal product of labor decreases as the number of workers increases.
Negative Marginal Return
When the addition of a unit of labor actually reduces total output.
Fixed Costs
A cost that does not change no matter how much of a good or service is produced.
Variable Costs
A cost that rises or falls depending on the quantity produced.
Total Cost
The sum of fixed costs and variable costs.
Average Total Cost
Total cost divided by quantity produced.
Marginal Cost
The extra cost of adding one unit.
Marginal Revenue
The additional income from selling one more unit of a good or service, sometimes equal to price.
Marginal Benefit
The extra benefit of adding one unit.
Operating Cost
The cost of operating a facility such as a factory or a store.
Subsidy
A government payment that supports a business or market.
Excise Tax
A tax on the total value of the money and property of a person who has died.
Regulation
Government intervention in a market that affects the production of a good.
Surplus
When quantity supplied is more than quantity demanded.
Shortage
When quantity demanded is more than quantity supplied.
Equilibrium Price
The price in which demand and supply are equal.
Price Ceiling
A maximum price that can legally be charged for a good or service.
Price Floor
A minimum price for a good or service.
Black Market
A market in which goods are sold illegally, without regard for government controls on price or quantity.
