Econ Unit 2 - Price determination in a competitive market

Competing supply

Resources that can be used to produce one good OR another good, but not both simultaneously.

Competitive markets

Markets with numerous buyers and sellers, low barriers to entry and exit.

Complementary goods

Goods that are often bought together due to joint demand, like printers and ink cartridges.

Composite demand

Demand for a multi-purpose good that serves various needs.

Condition of demand

Factors other than price influencing the position of a good's demand curve.

Condition of supply

Factors other than price influencing the position of a good's supply curve.

Customer sovereignty

Consumers collectively influence production through their spending power, especially in perfectly competitive markets.

Cross elasticity of demand (XED)

Measures how a good's demand changes in response to price changes in another good.

Demand

The quantity of a good or service consumers are willing and able to buy at a given price and time.

Derived demand

Demand for a good used as an input for producing another good.

Disequilibrium

Excess supply or demand in a market leading to imbalance.

Effective demand

Desire for a good or service supported by the ability to pay for it.

Elasticity

The responsiveness of one variable to changes in another variable.

Equilibrium

State of balance in a market with no excess supply or demand.

Equilibrium price

Price where planned demand equals planned supply.

Excess demand

Situation where consumers want more than producers are willing to sell, below equilibrium price.

Excess supply

Situation where producers want to sell more than consumers are willing to buy, above equilibrium price.

Exchange

Trading goods using a medium of exchange like money.

Income elasticity of demand (YED)

Measures how a good's demand changes with consumer income changes.

Inferior good

A good for which demand increases as incomes decrease.

Joint supply

Production of one good results in the production of another good from the same raw materials.

Normal good

A good for which demand increases as incomes rise.

Price elasticity of supply

Measures how a good's supply changes in response to price changes.

Producer sovereignty

Producers determine what to produce and the prices to set.

Substitute good

A good in competitive demand that can replace another similar good.

Supply

The quantity of a good or service producers are willing and able to sell at a given price and time.