MACRO QUIZ 2 VOCAB

competitive market

market in which there are many buyers and sellers of the same good or service - key feature is that no individual’s actions have a noticeable effect on the price at which the good or service is sold

supply and demand model

describes behavior of a competitive market

supply / demand schedule

a table showing how much of a good or service sellers will want to provide / consumers will want to buy at different prices

supply / demand curve

a graphical representation of the supply / demand schedule, another way of showing the relationship between the quantity supplied / quantity demanded and price

shift of the supply / demand curve

the change in the quantity supplied / demanded at any given price, represented by the change in position of the original supply / demand curve to a new location

movements along the supply / demand curve

changes in the quantity supplied / quantity demanded arising from a change in price

input

any good or service that is used to produce another good or service

individual supply / demand curve

shows the relationship between quantity supplied / quantity demanded and price for an individual seller / buyer

law of demand

a higher price for a good, other things equal, leads people to demand a smaller quantity of that good

substitutes

a rise in the price of one good makes buyers more likely to buy the other good

complements

a rise in the price of one good makes consumers less willing to buy another good

normal good

the demand for them increases when consumer income rises

inferior good

Goods for which demand decreases when income rises

equilibrium price

The price that matches the quantity supplied and the quantity demanded (AKA market clearing price)

equilibrium quantity

the quantity bought and sold at equilibrium price

surplus

excess supply

shortage

excess demand