Economics: Demand, Supply, and Competitive Markets

Vocabulary flashcards covering core microeconomic principles including shifts vs. movements along curves, determinants of demand, the law of supply, and characteristics of competitive markets.

Increase in Demand

A rightward shift of the entire demand curve, meaning that for every given price, the quantity demanded is higher.

Increase in Quantity Demanded

A movement along the existing demand curve where a consumer's quantity demanded increases.

Normal Good

A good for which demand increases when consumer income goes up, such as steak.

Inferior Good

A good for which demand increases when income decreases, or decreases when income goes up, such as ground beef.

Complementary Goods

Related goods where a decrease in the price of one good increases the demand for the other, such as hot dogs and relish.

Substitute Goods

Related goods where a decrease in the price of one good decreases the demand for the other, such as taxi fares and subway rides.

Law of Supply

The principle stating that, holding everything else constant, increases in price cause increases in quantity supplied, and decreases in price cause decreases in quantity supplied.

Price Takers

Participants in a competitive market who have no power to set prices individually and must accept the market price.

Standardized Goods

Units of a good that are identical to one another, having no differences in features or quality.

Full Information

A condition in a competitive market where every participant knows what the prices are, with labeled prices and no hidden costs.

Transaction Costs

Incidental costs or burdens required to complete a purchase, such as having to hike twenty minutes to reach a store.

Market Equilibrium

The point of balance represented by the intersection of the supply curve and the demand curve.