market
a group of buyers and sellers of a particular good or service
competitive market
a market in which there are many buyers and sellers so that each has a negligible impact on the market price
quantity demanded
the amount of a good that buyers are willing and able to purchase
law of demand
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
normal good
a good for which, other things equal, an increase in income leads to an increase in demand
inferior good
a good for which, other things equal, an increase in income leads to a decrease in demand
substitutes
two goods for which an increase in the price of one leads to an increase in the demand for the other
complements
two goods for which an increase in the price of one leads to a decrease in the demand for the other
demand schedule
a table that shows the relationship between the price of a good and the quantity demanded
demand curve
a graph of the relationship between the price of a good and the quantity demanded
ceteris paribus
a Latin phrase, translated as "other things being equal," used as a reminder that all variables other than the ones being studied are assumed to be constant
quantity supplied
the amount of a good that sellers are willing and able to sell
law of supply
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
supply curve
a graph of the relationship between the price of a good and the quantity supplied
equilibrium
a situation in which supply and demand have been brought into balance
equilibrium price
the price that balances supply and demand
equilibrium quantity
the quantity supplied and the quantity demanded when the price has adjusted to balance supply and demand
surplus
a situation in which quantity supplied is greater than quantity demanded
shortage
a situation in which quantity demanded is greater than quantity supplied
law of supply and demand
the claim that the price of any good adjusts to bring the supply and demand for that good into balance