Introduction to Microeconomics ECO1104 - Markets

These flashcards cover key vocabulary and concepts related to markets, demand, supply, and equilibrium in microeconomics.

Market

A place where buyers and sellers trade a particular good or service.

Demand

The quantity of a product that consumers are willing and able to purchase at a given price.

Law of Demand

As price decreases, quantity demanded increases, and vice versa, all other things equal.

Supply

The quantity of a product that producers are willing and able to sell at a given price.

Law of Supply

As price increases, quantity supplied increases, and vice versa, all other things equal.

Market Equilibrium

The point where quantity supplied equals quantity demanded.

Surplus

A situation where quantity supplied exceeds quantity demanded at a given price.

Shortage

A situation where quantity demanded exceeds quantity supplied at a given price.

Equilibrium Price

The price at which the quantity supplied equals the quantity demanded.

Equilibrium Quantity

The quantity of goods sold at the equilibrium price.

Perfectly Competitive Market

A market structure characterized by standardized goods, full information, no transaction costs, and participants being price takers.

Demand Curve

A graphical representation showing the relationship between price and quantity demanded.

Supply Curve

A graphical representation showing the relationship between price and quantity supplied.

Non-Price Determinants of Demand

Factors other than price that can lead to a shift in the demand curve.

Non-Price Determinants of Supply

Factors other than price that can lead to a shift in the supply curve.

Shifts in Demand

Changes in demand caused by factors like changes in preferences, income, or price of related goods.

Shifts in Supply

Changes in supply caused by factors like changes in technology, input prices, or number of producers.

Price Takers

Participants in a market who must accept the market price as given.

Transaction Costs

Costs incurred in making an economic exchange.

Demand Schedule

A table that displays the quantities demanded at various prices.

Supply Schedule

A table that displays the quantities supplied at various prices.

Competitive Market

A market where there are many buyers and sellers of the same product.

Ceteris Paribus

A Latin phrase meaning 'all other things being equal'.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Normal Goods

Goods for which demand increases as consumer income rises.

Inferior Goods

Goods for which demand increases as consumer income falls.

Substitutes

Goods that can be used in place of each other.

Complements

Goods that are used together, where an increase in demand for one increases the demand for the other.

Market Disequilibrium

A situation in which quantity supplied does not equal quantity demanded.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to changes in price.

Price Elasticity of Supply

A measure of how much the quantity supplied of a good responds to changes in price.

Factors Affecting Market Equilibrium

Changes in demand or supply due to external factors, leading to shifts in the curves.

Graphing Supply and Demand

A visual representation used to identify equilibrium price and quantity.