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23 Cards in this Set
- Front
- Back
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perfectly competitive market |
a market that meets the conditions of having (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. |
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demand schedules |
a table that shows the relationship between the price of a product and the quantity of the product demanded. |
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quantity demanded |
quantity demanded of a good or service that a consumer is willing and able to purchase at a given price |
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demand curve |
a curve that shows the relationship between the price of a product and the quantity of the product demanded |
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market demand |
the demand by all the consumers of a given good or service |
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law of demand |
a rule that states that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease. |
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subsitution effect |
the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are subsitutes |
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income effect |
the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power. |
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ceteris paribus condition |
the requirement that when analyzing the relationship between two variables -such as price and the quantity demanded- other variables must be held constant. |
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normal good |
a good for which the demand increases as income rises and decreases as income falls. |
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inferior good |
a good for which the demand increases as income falls and decreases as income rises. |
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substitutes |
goods and services that can be used for the same purpose. |
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complements |
goods and services that are used together |
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demographics |
the characteristics of a population with respect to age, race, and gender. |
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quantity supplied |
the amount of a good or service that a firm is willing and able to supply at a given price. |
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supply schedule |
a table that shows the relationship between the price of a product and the quantity of the product supplied. |
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supply curve |
a curve that shows the relationship between the price of a product and the quantity of the product supplied. |
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law of supply |
a rule that states, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied. |
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technological change |
a change in the quantity of output a firm can produce using a given quantity of inputs. |
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market equilibrium |
a situation in which quantity demanded equals quantity supplied. |
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competitive market equilibrium |
a market equilibrium with many buyers and sellers. |
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surplus |
a situation in which the quantity supplied is greater than the quantity demanded. |
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shortage |
a situation in which the quantity demanded is greater than the quantity supplied. |
