unit 4 vocabulary

Law of demand

Higher price leads to lower quantity demanded, and lower price leads to higher quantity demanded.

Rent control

Imposes a limit on the amount of money a landlord can charge for leasing or renewing a lease.

Price control

Government-mandated maximum and minimum prices for a good.

Price ceiling

Maximum price at which a good can be sold.

Price floor

Minimum price at which a good can be sold.

Minimum wage

Legally mandated lowest amount a worker can be paid.

Shortage

When the quantity demanded exceeds the quantity in stock.

Surplus

When the quantity in stock exceeds the quantity demanded.

Equilibrium price

Price at which the supply of a good equals the demand for it.

Supply

Quantity of a good available.

Law of supply

Higher price leads to higher supply, and lower price leads to lower supply.

Elasticity of demand

Degree to which demand changes in response to price or income level changes.

Inelastic demand

Demand for a good remains the same when prices change.

Unitary elastic demand

Demand changes proportionally to price changes.

Demand

Desire for a good from consumers.

Substitute good

Product seen as similar or equal in value to another good.

Complementary good

Two products with joint demand; an increase in demand for one leads to an increase in demand for the other.

Diminishing marginal utility

Decreased satisfaction as more of a product is consumed.

Marginal benefit

Maximum amount a consumer is willing to pay for a product for its use or enjoyment.