Macroeconomics Principles And Tools: Chapter 4 Key Terms.

Front 1

Perfectly competitive market

Back 1

A market with a very large number of firms, each of which produces the same standardized product and is so small that it does not affect the market price of the good it produces.

Front 2

Demand schedule

Back 2

A table of numbers that shows the relationship between price and quantity demanded by a consumer, ceteris paribus (everything else held fixed).

Front 3

Individual demand curve

Back 3

A curve that shows the relationship between price and quantity demanded by a consumer, ceteris paribus. (Everything else held fixed).

Front 4

Quantity demanded

Back 4

The amount of a good a consumer is willing to buy.

Front 5

Law of demand

Back 5

The higher the price, the smaller the quantity demanded, ceteris paribus (everything else held fixed).

Front 6

Change in quantity demanded

Back 6

A change in the amount of a good demanded resulting from a change in the price of the good; represented graphically by movement along the demand curve.

Front 7

Substitution affect

Back 7

The change in consumption resulting from a change in the price of one good relative to the price of other goods.

Front 8

Income affect

Back 8

The change in consumption resulting from an increase in the consumer's real income.

Front 9

Market demand curve

Back 9

A curve showing the relationship between price and quantity demanded by all consumers together, ceteris paribus (everything else held fixed).

Front 10

Supply schedule

Back 10

A table of numbers that shows the relationship between price and quantity supplied, ceteris paribus (everything else held fixed).

Front 11

Quantity supplied

Back 11

The amount of a good a firm is willing to sell.

Front 12

Individual supply curve

Back 12

A curve that shows the relationship between price and quantity supplied by a producer ceteris paribus (everything else held fixed).

Front 13

Law of supply

Back 13

The higher the price, the larger the quantity supplied, ceteris paribus (everything else held fixed).

Front 14

Change in quantity supplied

Back 14

A change in the quantity supplied resulting from a change in the price of the good; represented graphically by movement along the supply curve.

Front 15

Market supply curve

Back 15

A curve showing the relationship between price and quantity supplied by all producers together, ceteris paribus (everything else held fixed).

Front 16

Market equilibrium

Back 16

A situation in which the quantity of a product demanded equals the quantity supplied, so there is no pressure to change the price.

Front 17

Excess demand

Back 17

A situation in which, at the prevailing price, consumers are willing to buy more than producers are willing to sell.

Front 18

Excess supply

Back 18

A situation in which, at the prevailing price, producers are willing to sell more than consumers are willing to buy.

Front 19

Change in demand

Back 19

A change in the amount of a good demanded resulting from a change in something other than the price of the good; represented graphically by a shift of the demand curve.

Front 20

Normal good

Back 20

A good for which an increase in income increases demand.

Front 21

Substitutes

Back 21

Two goods that are related in such a way that an increase in the price of one good increases the demand for the other good.

Front 22

Complements

Back 22

Two good that are related in such a way that an increase in the price of one good decreases the demand for the other good.

Front 23

Inferior good

Back 23

A good for which an increase in income decreases demand.

Front 24

Change in supply

Back 24

A change in the amount of a good supplied resulting from a change in something other than the price of the good; represented graphically by a shift of the supply curve.