Introduction to Microeconomics: Demand, Supply, and Market Equilibrium

Flashcards covering core terminology and foundational principles of microeconomics from Chapters 1 through 7, including market structures, supply and demand dynamics, elasticities, and market equilibrium.

Market

Any type of system or organization that makes transactions possible by bringing buyers and sellers together.

Competitive Market

A market with many buyers and sellers where each individual has a negligible impact on the price.

Monopsony

A market situation mentioned in the lecture featuring a single seller who holds a rare item and controls the price.

Perfectly Competitive Market

A hypothetical benchmark market structure where all goods are exactly the same and all buyers and sellers are price takers.

Price Taker

A buyer or seller in a market who has no influence over the price and must accept the market price as given.

Quantity Demanded

The exact amount of a good that buyers are willing and able to purchase at a specific price.

Law of Demand

The rule stating that, other things being equal, the quantity demanded of a good falls when the price of the good rises, and rises when the price falls.

Ceteris Paribus

A Latin term (rendered as 'steres paribus' in the lecture transcript) meaning 'other things being equal' or 'other things do not change'.

Demand Schedule

A table showing the exact numerical relationship between the price of a good and the quantity demanded.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Market Demand

The sum of the quantities demanded by all individual consumers in a market at each given price level.

Normal Good

A good for which demand increases when consumer income rises.

Inferior Good

A good for which demand falls when consumer income rises, as buyers switch to higher-quality alternatives.

Substitutes

Pairs of goods used in place of one another, where an increase in the price of one leads to an increase in the demand for the other.

Complements

Pairs of goods used together, where an increase in the price of one leads to a decrease in the demand for the other.

Law of Supply

The rule stating that, other things being equal, the quantity supplied of a good rises when the price of the good rises.

Supply Schedule

A table displaying the quantities of a good that a producer is willing and able to offer at various price levels.

Supply Curve

A graphical line showing how the price of a good affects the quantity supplied by producers.

Market Supply

The curve obtained by horizontally adding the quantities supplied by all individual producers at each price level.

Inputs

Resources needed to produce goods and services, categorized broadly into labor, capital, and land.

Equilibrium Price

The specific market price at which the quantity supplied by sellers equals the quantity demanded by buyers.

Surplus

A market condition that occurs when the price is higher than the equilibrium price, causing quantity supplied to exceed quantity demanded.