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20 Cards in this Set
- Front
- Back
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Perfectly Competitive Market
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A market in which there are many buyers and sellers, all the products are identical, and there are no barriers to new sellers entering the market.
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Demand Schedule
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A table showing the relationship between the price of a product and the quantity of the product demanded.
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Quantity Demanded
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The amount of a good or service that a consumer is willing and able to purchase at a given price.
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Demand Curve
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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
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The demand by all the consumers of a given good or service.
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Law of Demand
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The rule 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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Substitution Effect
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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 substitutes.
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Income Effect
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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
(“all else equal”) |
The requirement that when analyzing the relationship between two variables—such as price and quantity demanded—other variables must be held constant.
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Normal Good
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A good for which the demand increases as income rises and decreases as income falls.
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Inferior Good
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A good for which the demand increases as income falls and decreases as income rises.
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Substitutes
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Goods and services that can be used for the same purpose.
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Complements
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Goods and services that are used together.
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Demographics
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The characteristics of a population with respect to age, race, and gender.
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Quantity Supplied
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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
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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
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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
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The rule that, 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
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A positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs.
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Market Equilibrium
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A situation in which quantity demanded equals quantity supplied.
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