Introduction to Markets and Economic Principles

These flashcards cover fundamental concepts about markets, demand, supply, and economic principles discussed in the provided lecture notes.

Market

An organizational institution where buyers and sellers interact.

Voluntary Transactions

All transactions that occur without coercion, where buyers and sellers exchange something of value.

Demand and Supply

The forces that determine the price of a good or service in a market.

Ceteris Paribus

A Latin phrase meaning 'holding everything else equal'; used to analyze the effect of one variable.

Contraction of Demand

A decrease in the quantity demanded as a result of an increase in price.

Expansion of Demand

An increase in the quantity demanded as a result of a decrease in price.

Income Effect

The change in quantity demanded resulting from a change in consumers' purchasing power due to price changes.

Substitution Effect

The change in quantity demanded resulting from a change in the price of a good making it more or less appealing compared to alternatives.

Diminishing Marginal Utility

The principle that as consumption of a good increases, the additional satisfaction gained from consuming each additional unit decreases.

Marginal Cost

The cost of producing one more unit of a good.

Opportunity Cost

The value of the next best alternative that must be forgone when making a decision.

Competitive Market

A market structure characterized by many buyers and sellers, where no single buyer or seller can influence the price.

Low Barriers to Entry and Exit

Conditions in a market that allow firms to enter or exit easily without significant costs or obstacles.

Price Taker

A buyer or seller who accepts the market price without being able to influence it.

Visual Product Differentiation

The degree to which products are perceived differently by consumers based on branding, packaging, or other features.