econ vocab 2

law of supply

producers offer more of

a good or service as jt’s price increase and less

as price falls

law of demand

consumers will buy more of a good when its price is lower and less when the price is higher

movement along a curve

change in the quantity of a good/service that is directed caused by a change in the price of that good/service

shift of a curve

fundamental change in the relationship between two variables, causing the entire curve to move to the left/right, rather than just a movement along the curve

purchasing power

the ability to purchase goods and services

subsidy

a government payment that supports a business or market

price ceiling

a maximum price that can legally be charged for a good or service

law of diminishing marginal utility

the idea that the extra satisfaction a person gets from consuming one more unit of a product/service decreases because they consume more of it

equilibrium point

of balance at which the quantity demanded equals the quantity supplied

oligopoly

if market structure in which a few large forms dominate a market

barrier to entry

any factor that makes it difficult a new form to enter market

monopolistic competition

if market structure in which many companies sell products that are similar but not identical

market power

the ability of a company to control prices and total market output

perfect (pure) competition

a market structure in which a large kimberly of firms all produce the same product and no single seller controls supply or prices

price floor

a minimum price for a good or service