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34 Cards in this Set
- Front
- Back
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Competitive market |
A market in which a large number of buyers and sellers possess good market information and can easily enter or leave the market. |
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Equilibrium price |
The price at which planned demand for a good or service exactly equals the planned supply |
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Supply |
The quantity of a good or service that firms are willing and able to sell at given prices in a given period of time. |
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Demand |
The quantity of a good or service that consumers are willing and able to buy at given prices in a given period of time. |
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Effective demand |
The desire for a good or service backed by the ability to pay |
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Market demand |
The quantity of a good or service that all the consumers in a market are willing and able to buy at different market prices |
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Condition of demand |
A determinant of demand, other than the good's own price, that fixes the position of the demand curve. |
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Increase in demand |
A rightward shift of the demand curve |
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Decrease in demand |
A leftward shift of the demand curve |
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Normal good |
A good for which demand increases as income rises and demand decreases as income falls |
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Inferior good |
A good for which demand decreases as income rises and demand increases as income falls |
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Elasticity |
The proportionate responsiveness of a second variable to an initial change in the first variable |
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Price elasticity of demand |
Measures the extent to which the demand for a good changes in response to a change in the price of that good. |
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Income elasticity of demand |
Measures the extent to which the demand for a good changes in response to a change in income |
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Cross-elasticity of demand |
Measures the extent to which the demand for a good changes in response to a change in the price of another good.
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Market supply |
The quantity of a good or service that all firms plan to sell at a given price in a given period of time. |
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Profit |
The difference between total sales revenue and total costs of production. |
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Total revenue |
The money a firm receives from selling its total output |
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Conditions of supply |
Determinants of supply, other than the good's own price, that fix the position of the supply curve. |
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Increase in supply |
A rightward shift of the supply curve |
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Decrease in supply |
A leftward shift of the supply curve |
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Price elasticity of supply |
Measures the extent to which the supply of a good changes in response to a change in the price of that good. |
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Equilibrium |
A state or rest between opposing forces. |
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Disequilibrium |
A situation in a market where there is excess supply or demand. |
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Market equilibrium |
When planned demand equals planned supply in the market |
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Market disequilibrium |
Exists at any price other than the equilibrium price. When excess supply or demand exists in the market. |
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Excess supply |
When firms wish to sell more than consumers wish to buy, with the price above the equilibrium price. |
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Excess demand |
When consumers wish to buy more than firms wish to sell, with the price below the equilibrium price. |
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Joint supply |
When one good is produced, another good is also produced from the same raw materials. |
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Competing supply |
When raw materials are used to produce one good, they cannot be used to produce another good. |
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Complementary good |
A good in joint demand, or a good which is demanded at the same time as the other good. |
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Substitute good |
A good in competing demand, namely a good which can be used in place of the other good |
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Composite demand |
Demand for a good which has more than one use |
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Derived demand |
Demand for a good which is an input into the production of another good |
