Studied by 16 peopleMarket
A group of buyers and sellers of a particular good or service
Competitive Market
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price
Quantity Demanded
The amount of a good that buyers are willing and able to purchase
Law of Demand
The claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
Demand Schedule
A table that shows the relationship between the price of a good and the quantity demanded
Demand Curve
A graph of the relationship between the price of a good and the quantity demanded
Normal Good
A good for which, other things equal, an increase in income leads to an increase in demand
Inferior Good
A good for which, other things equal, an increase in income leads to a decrease in demand
Substitutes
Two goods for which an increase in the price of one leads to an increase in the demand for the other
Complements
Two goods for which an increase in the price of one leads to a decrease in the demand for the other
Quantity Supplied
The amount of a good that sellers are willing and able to sell
Law of Supply
The claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
Supply Schedule
A table that shows the relationship between the price of a good and the quantity supplied
Supply Curve
A graph of the relationship between the price of a good and the quantity supplied
Equilibrium
A situation in which the market price has reached the level at which quantity supplied equals quantity demanded
Equilibrium Price
The price that balances quantity supplied and quantity demanded
Equilibrium Quantity
The quantity supplied and the quantity demanded at the equilibrium price
Surplus
A situation in which quantity supplied is greater than quantity demanded
Shortage
A situation in which quantity demanded is greater than quantity supplied
Law of Supply and Demand
The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
Law of Diminishing Marginal Utility
The marginal utility of a good gets smaller as one consumes more of that good, ceteris paribus.
Substitution Effect
If a good becomes relatively more expensive than its substitutes, consumers will buy less of it.
Income Effect
If the price of a good decreases, ceteris paribus, then one can afford to buy more of all goods.
Law of Diminishing Marginal Product
The marginal product of an input gets smaller as one uses more of that input, ceteris paribus.
Utility
The usefulness of a product
Utility
The benefit gained from consuming a product
Utility
The satisfaction received when consuming a product
Utility
The happiness achieved by consuming
Util
A measurement of utility
Marginal Cost
Marginal benefit must equal or be greater than
Change in input prices
What is the first cause for a shift in supply
Changes in technology
What is the second cause for a shift in supply
Change in productivity
What is the third cause for a shift in supply
Changes in producer expectation of price
What is the fifth cause for a shift in supply
Change in number of sellers
What is the fourth cause for a shift in supply
change in government involvement
What is the sixth cause for a shift in supply
Note
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