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### 27 Cards in this Set

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 Demand the willingness and ability of buyers to produce different quantities of a good at differnt prices during a specific time period Law of demand as the price of a good rises, the quantity demanded of the good falls, and as the price of a good falls, the quantity demanded of the good rises, ceretis paribus Absolute (money) price the price of a good in money terms Relative price the price of a good in terms of another good Law of diminishing marginal utility for a given time period, the marginal (additional) utility or satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases Demand schedule the numerical tabulation of the quantitiy demanded of a good at differnt prices. a demand schedule is the numerical representation of the law of demand Normal good a good the demand for which rises (falls) as income rises (falls) Inferior good a good for which the demand falls (rises) as the income rises (falls) Neutral good a good for which the demand does not change as income rises or falls Substitutes two goods that satisfy similar needs or desires. if two goods are substitutes, the demand for one rises as the price of the other rises (or the demand for one falls as the price for the other falls) Complements two goods that are used jointly in consumption. if two goods are complements, the demand for one rises as the price for the other falls (or the demand for one falls as the price for the other rises) Own price the price of a good. for example, if the price of oranges is \$1, this is (its) own price Supply the willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period Law of supply as the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of a the good falls, ceteris paribus Supply schedule the numerical tabulation of the quantity supplied of a good at different prices. a supply schedule is the numerical representation of the law of supply Surplus (escess supply) a condition in which quantity supplied is greater than quantity demanded. surpluses occur only at prices above equilibrim price Shortage (excess demand) a condition in which quantity demanded is greater than quantity supplied. shortages occur only at prices below equilibrium price Equilibrium price (market-clearing price) the price at which quantity demanded of a good equals quantity supplied Equilibrium quantity the quantity that corresponds to equilibrium price. the quantity at which the amount of the good that buyers are willing and able to buy equals the amount that sellers are willing and able to sell, and both equal the amount actually bought and sold Disequilibrium price a price other than equilibrium price. a price at which quantity demanded does not equal quantity supplied Disequilibrium a state of either surplus or shortage in the market Price floor a government-madated minimum price below which legal trades cannot be made Consumer's surplus the difference between the maximum price the buyer is willing and able to pay for a good or service and the minimum price actually paid CS = Maximum buying price - Price paid Producer's (seller's) surplus the differences the price sellers receive for a good and the minimum or lowest price for which they would have sold the good. PS = Price received - Minimum selling price Total surplus the sum of consumers' surplus and producers' surplus TS = CS + PS Price ceiling a government-mandate maximum price above which legal trades cannot be made Tie-in sale a sale whereby one good can be purchased only if another good is also purchased