Chapter 3 Glossary

Front 1

Ceteris paribus ('all else being equal')

Back 1

The requirement that when analysing the relationship between two variables-such as price and quantity demanded-other variables must be held constant.

Front 2

Competitive market equilibrium

Back 2

A market equilibrium with many buyers and sellers

Front 3

Complements

Back 3

Goods and services that are used together

Front 4

Demand curve

Back 4

A curve that shows the relationship between the price of a product and the quantity of the product demanded.

Front 5

Demand schedule

Back 5

A table showing the relationship between the price of a product and the quantity of the product demanded

Front 6

Demographics

Back 6

The characteristics of a population with respect to age, race and gender.

Front 7

Income effect

Back 7

The change in the quantity demanded of a good or service that results from the effect of a change in the good's price on consumer purchasing power.

Front 8

Inferior good

Back 8

A good for which the demand increases as income falls and decreases as income rises.

Front 9

Law of demand

Back 9

Holding everything else constant, when the price of a product falls the quantity demanded of the product will increase, and when the price of a product rises the quantity demanded of the product will decrease.

Front 10

Law of supply

Back 10

Holding everything else constant, increases in the price of a product cause an increase in the quantity supplied, and decreases in the price of a product cause a decrease in the quantity supplied.

Front 11

Market demand

Back 11

The demand by all the consumers of a given good or service.

Front 12

Market equilibrium

Back 12

A situation in which quantity demanded equals quantity supplied.

Front 13

Market supply

Back 13

The supply by all firms of a given good or service.

Front 14

Normal good

Back 14

A good for which the demand increases as income rises and decreases as income falls.

Front 15

Productivity

Back 15

The output produced per unit of input.

Front 16

Quantity demanded

Back 16

The amount of a good or service that a consumer is willing and able to purchase at a given price.

Front 17

Quantity supplied

Back 17

The amount of a good or service that a firm is willing and able to supply at a given price.

Front 18

Shortage

Back 18

A situation in which the quantity demanded is greater than the quantity supplied.

Front 19

Substitutes

Back 19

Goods or services that can be used for same purpose.

Front 20

Substitution effect

Back 20

The change in the quantity demanded of a good or service that results from a change in price, making the good more or less expensive relative to other goods that are substitutes.

Front 21

Supply curve

Back 21

A curve that shows the relationship between the price of a product and the quantity of the product supplied.

Front 22

Supply schedule

Back 22

A table that shows the relationship between the price of a product and the quantity of the product supplied.

Front 23

Surplus

Back 23

A situation in which the quantity supplied is greater than the quantity demanded.

Front 24

Technological change

Back 24

Change in the ability of a firm to produce a given level of output with a given quantity of inputs.