Principles of Economics Key Terms U3 P2

Unit 3 Key Terms (Part 2) from the Principles Economics of 2e book provided by OpenStax

Normal Good

A good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls

Price

What a buyer pays for a unit of the specific good or service

Price Ceiling

A legal maximum price

Price Control

Government laws to regulate prices instead of letting market forces determine prices

Price Floor

A legal minimum price

Producer Surplus

The extra benefit producers receieve from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept

Quantity Demanded

The total number of units of a good or service consumers are willing to purchase at a given price

Quantity Supplied

The total number of units of a good or service producers are willing to sell at a given price

Shift in Demand

When a change in some economic factor (other than price) causes a different quantity to be demanded at every price

Shift in Supply

When a change in some economic factor (other than price) causes a different quantity to be supplied at every price

Shortage

At the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand

Social Surplus

The sum of consumer surplus and producer surplus

Substitute

A good that can replace another to some extent, so that greater consumption of one good can mean less of the other

Supply

The relationship between price and the quantity supplied of a certain good or service

Supply Curve

A line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the veritcal axis

Supply Schedule

A table that shows a range of prices for a good or service and the quantity supplied at each price

Surplus

At the existing price, quantity supplied exceeds the quantity demanded; also called excess supply

Total Surplus

The sum of consumer surplus and producer surplus (ditto social surplus)