Principles Of Macroeconomics - Chapter 4

Front 1

What is a market?

Back 1

A market is a group of buyers and sellers of a particular good or service.

Front 2

What is a competitive market?

Back 2

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.

Front 3

What is a perfectly competitive market?

Back 3

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.

Front 4

What does the term "price takers" refer to?

Back 4

Buyers and sellers in perfectly competitive markets are said to be "price takers" because they must accept the price that the market determines.

Front 5

What is a "monopoly"

Back 5

A "monopoly" is the sole seller in a one-seller market. This seller sets the price in that market.

Front 6

What is an "oligopoly"?

Back 6

This term describes a market with a few sellers that do not always compete aggressively.

Front 7

Describe a market that is "monopolistically competetitive".

Back 7

This term describes a market that contains many sellers but each offers a slightly different product. An example is the market for magazines.

Front 8

What is the "quantity demanded"?

Back 8

This term indicates the ammount of the good that buyers are silling and able to purchase.

Front 9

What does "negatively related" mean?

Back 9

Two measurements have this relationship if one falls as the other rises and rises as the other falls.

Front 10

What is "the law of demand"

Back 10

The "law of demand" states that demand and price are negatively related.

Front 11

What is a "demand schedule"?

Back 11

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.

Front 12

What is a "demand curve"

Back 12

This is the downward-sloping line relating price and quantity demanded.

Front 13

What is "market demand"?

Back 13

This is the sum of all individual demands for a particular good or service.

Front 14

What are the most important variables that can shift the demand curve?

Back 14

Income.
Price of Related goods ( substitutes).
Tastes.
Expectations (regarding, for example, future income and future price ).
Number of buyers.

Front 15

What is a "normal good"?

Back 15

This is a good for which demand falls when income falls.

Front 16

What is an "inferior good".

Back 16

This is a good for which demand rises when income falls.

Front 17

What are "substitutes"?

Back 17

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

Front 18

What are "complements?"

Back 18

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.

Front 19

What are some things that can shift the supply curve?

Back 19

1. Input Prices
2. Technology
3. Expectations
4. Number of Sellers

Front 20

What is found at the intersection of the supply curve and demand curve?

Back 20

The equilibrium price and the equilibrium quantity.