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20 Cards in this Set
- Front
- Back
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competitive market
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a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
ex: united states market |
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complements
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two goods for which an increase in the price of one leads to a decrease in the demand for the other
ex: lemonade, limonade |
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demand curve
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a graph of the relationship between the price of a good and the quantity demanded
ex: a graph of the relationship between the price of lemonade and the quantity demanded |
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demand schedule
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a table that shows the relationship between the price of a good and the quantity demanded
ex: a table that shows the relationship between lemonade and the quantity demanded |
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equilibrium
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a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
ex: quantity of lemonade supplied equals quantity of lemonade demanded |
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equilibrium price
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the price that balances quantity supplied and quantity demanded
ex: $5 |
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equilibrium quantity
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the quantity supplied and the quantity demanded at the equilibrium price
ex:10 lemonades |
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inferior good
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a good for which, other things equal, an increase in income leads to a decrease in demand
ex:bus tickets |
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law of demand
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the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
ex: demand of lemonade |
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law of supply
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the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
ex: supply of lemonade |
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law of supply and demand
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the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
ex: demand and supply of lemonade |
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market
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a group of buyers and sellers of a particular good or service
ex: the people of the united states |
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normal good
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a good for which, other things equal, an increase in income leads to an increase in
ex: televisions |
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quantity demanded
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the amount of a good that buyers are willing and able to purchase
ex: 5 lemonades |
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quantity supplied
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the amount of a good that sellers are willing and able to sell
ex: 20 lemonades |
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shortage
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a situation in which quantity demanded is greater than quantity supplied
ex: qd (5) > qs (3) |
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substitutes
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two goods for which an increase in the price of one leads to an increase in the demand for the other
ex: peanut butter and jelly |
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supply curve
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a graph of the relationship between the price of a good and the quantity supplied
ex: a graph of the relationship between the price of lemonade and the quantity supplied |
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supply schedule
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a table that shows the relationship between the price of a good and the quantity supplied
ex:a table that shows the relationship between the price of lemonade and the quantity supplied |
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surplus
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a situation in which quantity supplied is greater than quantity demanded
ex: qd (3) < qs (5) |
