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32 Terms
1
complements
Goods that are often used together so that consumption of one good tends to enhance consumption of the other.
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2
consumer surplus
The extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid.
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3
deadweight loss
The loss in social surplus that occurs when a market produces an inefficient quantity.
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4
demand
The relationship between price and the quantity demanded of a certain good or service.
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5
demand curve
A graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on the horizontal axis and the price on the vertical axis.
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6
demand schedule
A table that shows a range of prices for a certain good or service and the quantity demanded at each price.
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7
equilibrium
The situation where quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change.
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8
equilibrium price
The price where quantity demanded is equal to quantity supplied.
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9
equilibrium quantity
The quantity at which quantity demanded and quantity supplied are equal for a certain price level.
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10
excess demand
At the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage.
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11
excess supply
At the existing price, quantity supplied exceeds the quantity demanded; also called a surplus.
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12
factors of production
The resources such as labor, materials, and machinery that are used to produce goods and services; also called inputs.
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13
inferior good
A good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls.
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14
inputs
The resources such as labor, materials, and machinery that are used to produce goods and services; also called factors of production.
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15
law of demand
The common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant.
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16
law of supply
The common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied, while all other variables are held constant.
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17
normal good
A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls.
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18
price
What a buyer pays for a unit of the specific good or service.
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19
price ceiling
A legal maximum price.
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20
price control
Government laws to regulate prices instead of letting market forces determine prices.
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21
price floor
A legal minimum price.
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22
producer surplus
The extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept.
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23
quantity demanded
The total number of units of a good or service consumers are willing to purchase at a given price.
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24
quantity supplied
The total number of units of a good or service producers are willing to sell at a given price.
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25
shortage
At the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand.
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26
social surplus
The sum of consumer surplus and producer surplus.
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27
substitute
A good that can replace another to some extent, so that greater consumption of one good can mean less of the other.
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28
supply
The relationship between price and the quantity supplied of a certain good or service.
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29
supply curve
A line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis.
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30
supply schedule
A table that shows a range of prices for a good or service and the quantity supplied at each price.
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surplus
At the existing price, quantity supplied exceeds the quantity demanded; also called excess supply.
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