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20 Cards in this Set

  • Front
  • Back
What is a market?
A market is a group of buyers and sellers of a particular good or service.
What is a competitive market?
A competitive market is a market in which there are many buyers and many sellers so that each has a negligible impact on the market price.
What is a perfectly competitive market?
Perfectly competitive markets are defined by two primary characteristics:
1. The goods being offered for sale are all the same.
2. The buyers and sellers are so numerous that no single buyer can influence the market price.
What does the term "price takers" refer to?
Buyers and sellers in perfectly competitive markets are said to be "price takers" because they must accept the price that the market determines.
What is a "monopoly"
A "monopoly" is the sole seller in a one-seller market. This seller sets the price in that market.
What is an "oligopoly"?
This term describes a market with a few sellers that do not always compete aggressively.
Describe a market that is "monopolistically competetitive".
This term describes a market that contains many sellers but each offers a slightly different product. An example is the market for magazines.
What is the "quantity demanded"?
This term indicates the ammount of the good that buyers are silling and able to purchase.
What does "negatively related" mean?
Two measurements have this relationship if one falls as the other rises and rises as the other falls.
What is "the law of demand"
The "law of demand" states that demand and price are negatively related.
What is a "demand schedule"?
This is a table that shows the relationship between the price of a good and the quantity demanded, holding constant everything else that influences how much consumers of the good want to buy.
What is a "demand curve"
This is the downward-sloping line relating price and quantity demanded.
What is "market demand"?
This is the sum of all individual demands for a particular good or service.
What are the most important variables that can shift the demand curve?
Price of Related goods ( substitutes).
Expectations (regarding, for example, future income and future price ).
Number of buyers.
What is a "normal good"?
This is a good for which demand falls when income falls.
What is an "inferior good".
This is a good for which demand rises when income falls.
What are "substitutes"?
These are two goods for which a drop in the price of one reduces the demand for the other. Often these are goods that can be used in place of each other - hot dogs & hamburgers... sweaters & sweatshirts
What are "complements?"
These are two goods for which a drop in the price of one increases the demand for the other. Often these are goods that are used together - computers & software... peanut butter & jelly.
What are some things that can shift the supply curve?
1. Input Prices
2. Technology
3. Expectations
4. Number of Sellers
What is found at the intersection of the supply curve and demand curve?
The equilibrium price and the equilibrium quantity.