PRICE AND MARKET DEFINITIONS

Market

A market is an arrangement where buyers and sellers come together/into contact to exchange goods and services at agreed prices.

Demand

Demand refers to the consumer’s desire and ability to purchase a good or service at various prices during a certain time frame, assuming other factors remain unchanged

Law of Demand

The Law of Demand explains that there is an inverse relationship between price and quantity demanded: as price rises, demand falls, and as price falls, demand rises

Quantity Demanded

Quantity demanded is the specific amount of a good or service that a consumer is willing and able to buy at a particular price over a certain period of time, ceteris paribus.

Market Demand

Market demand is the total quantity of a good or service that all consumers in a market are willing and able to buy at various prices during a specific time period.

It is found by adding up all individual demands at each price level.

Market demand = Everyone’s demand added together

Individual Demand

Individual demand refers to the quantity of a good or service that a single consumer is willing and able to purchase at different prices over a given period of time, ceteris paribus

Individual demand is the quantity of a good that an individual consumer is ready to buy at various prices

Changes in Demand

A change in demand is a shift in the demand curve due to factors like income, consumer preferences, or the prices of related goods, not because of a change in price

Changes in quantity demanded

A change in quantity demanded refers to a movement along the demand curve that occurs when the price of the good or service changes, ceteris paribus

Substitute

A substitute is a good or service that can be used in place of another. When the price of one rises, the demand for its substitute increases, ceteris paribus

Complement

A complement is a good or service that is used together with another good. When the price of one good rises, the demand for its complement falls, ceteris paribus.

Shortage

Shortage is a situation where the quantity demanded of a good or service is greater than the quantity supplied at the current price, leading to unsatisfied consumer demand

Excess Demand

Excess demand happens when the quantity demanded exceeds the quantity supplied at a given price, often leading to a shortage in the market. Market Price is below the equilibrium price

Quantity Supplied

Quantity supplied refers to the specific amount of a good or service that a producer is willing and able to offer for sale at a particular price over a certain period of time, ceteris paribus.

Supply

Supply is the quantity of a good or service that producers are willing and able to offer for sale at various prices over a specific time period, ceteris paribus

Market Supply

Market supply is the total amount of a good or service that all producers in a market are willing and able to supply at different price levels during a given period of time.

Law of Supply

The Law of Supply explains that there is a direct relationship between price and quantity supplied: as price rises, supply rises, and as price falls, supply falls.

Excess Supply

Excess supply occurs when the quantity supplied of a good or service exceeds the quantity demanded at a given price, leading to a surplus in the market. Market price above equilibrium price

Changes in supply

Changes in supply refer to shifts in the entire supply curve caused by factors other than the good’s own price—such as production costs, technology, taxes, or the number of sellers—which lead to a change in the quantity supplied at all prices.

Changes in quantity supplied

A change in quantity supplied refers to a movement along the supply curve caused solely by a change in the price of the good or service, ceteris paribus

Surplus

A surplus occurs when the quantity supplied of a good exceeds the quantity demanded at a given price, typically because the price is set above the equilibrium level.

Market equilibrium

Market equilibrium is the point where quantity demanded equals quantity supplied at a specific price,resulting in no tendency for the price to change, ceteris paribus.

Market disequilibrium

Market disequilibrium occurs when the quantity demanded does not equal the quantity supplied at the current price, leading to either excess demand or excess supply in the market

Equilibrium Price

The equilibrium price is the price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition with no tendency for price to change, ceteris paribus.

4. There’s no excess demand or excess supply at this price.

   • It is found where the demand and supply curves intersect.