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23 Cards in this Set
- Front
- Back
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market
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situation where potential buyers are in contact with potential sellers. enables needs and wants of both parties to be fulfilled whilst est a price and allowing an exchange to take place
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demand
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willingness and ability to purchase quantity of a good or service at a certain price over a given time period
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law of demand
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as the price of a good falls the quantity demanded of the product will normally increase, ceteris paribus
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demand schedule
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shows various quantities demanded of a particular product at all prices that might prevail in the market at a given time
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normal goods
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type of good in which demand increases as income increases
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inferior goods
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demand decreases as income increases (bread, taxi rides, mcdonalds)
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supply
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willingness and ability of a producer to produce a quantity of a good or service at a given price, in a given time period
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law of supply
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states that as the price of a good rises, the quantity supplied will normally rise
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market equilibrium
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a situation in which prices are relatively stable and the quantity of goods or services supplied is equal to the quantity demanded
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maximum price
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(price ceiling) is a price set by an authority below the equilibrium determined price. Prices cannot rise above this price, aimed at protecting loww income consumers
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minimum prices
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(price floor) is a price imposed by an authority above market equilibrium price. Prices cannot fall below this price. usually implemented in order to protect producers
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Buffer stock scheme
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a situation where a govt. intervenes in a market to stabalize prices by buying up surplus stock when prices would go too low or by supplying stock from a previously built up "buffer stock" when prices would go too high
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commodities
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are primary products used as inputs in the manufacturing process and traded in international markets (coffee, cotton, tin, zin, copper)
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elasticity
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is a meausre of the responsiveness of a variable to a change in some other variable
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price elasticity of demand
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measure of the responsiveness of the quantity demanded of a good or service when there is a change in its price
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inelastic
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demand considered inelastic if a change in price leads to a proptionally smaller change in quantity demanded. The PED is less than 1 and greater than 0
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elastic
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demand considered pric elastic if change in price leads to a proportionally greater change in quantity demanded. the PED is greater that one and less than infinity
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cross elasticity of demand
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measure to responsiveness of the demand for one good/service to a change in the price of anoter good/service
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income elasticity of demand
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measure of responsiveness of the demand for a good/service to a change in income
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done
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done
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Price elasticity of supply
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Measure of the responsiveness of the quantity supplied of a good or service when there is a change in the price
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Elastic supply
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Where a change in the price of a good or service leads to a greater than proportionally change in the quantity supplied of a good or service
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Inelastic supply
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Where a change in the price of a good or service leads to a less than proportionally change in the quantity supplied of a good or service
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