Honors Econ: Unit 12 - Price System

Market

An arrangement that brings sellers and buyers together for economic transactions

Supply

The total amount of goods and services offered for sale at various prices

Price

What the producer receives for selling one unit of a good or service

Supply Schedule

A table that shows the quantity supplied at different prices in the market

Supply Curve

Shows the relationship between quantity supplied and price on a graph

Quantity Supplied

A certain point on the supply curve, or one quantity on the supply schedule

Demand

The total amount of goods and services consumers are willing to buy at various prices

Quantity Demanded

The amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship

Subsidy

Occurs when the government pays a firm directly or reduces the firm’s taxes if the firm carries our certain actions

Price Elasticity

Measures the responsiveness of the quantity demanded or supplied of a good to a change in its price

Equilibrium Price

The price at which the quantity supplied in the market matches the quantity demanded in the market

Surplus

Excess supply; any above-equilibrium price, the quantity supplied exceeds the quantity demanded

Shortage

When the price is below equilibrium, there is excess demand

Price Controls

Government laws that serve to regulate prices rather than allowing the various markets to determine prices