market
an institution or mechanism that brings together buyers and sellers of particular goods, services, or resources
demand
a schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase as each of a series of possible prices during a specified period of time
demand schedule
shows demand for a single customer
law of demand
all else equal, as price falls, the quantity demanded rises and as prices rise, the quantity of demand falls
diminishing marginal utility
in any specific time period, each buyer of a product will derive less satisfaction from each successive unit of the product consumed
income effect
a lower price increases the purchasing power of a buyer's money income, enabling him or her to buy more
substitution effect
at a lower price buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive
demand curve
the inverse relationship between price and quantity demanded for any product
determinants of demand
assumed to be constant when drawing demand curve: consumer's preference, # of consumers in market, consumers' incomes, prices of related goods, and consumers expectations about future prices and incomes
normal goods
products whose demand caries directly with money income
inferior goods
products whose demand caries inversely with money income
substitute goods
one that can be used in place of another good
complementary goods
one that is used together with another good
change in demand
shift of the demand curve to the right or left
change in quantity demanded
change from one point to another of the demand curve, caused by and increase or decrease of price
supply
schedule or curve showing the amounts of a product that producers are willing and able to make available for sale during a specific period
supply schedule
single product; quantities of a product that will be supplied at various prices, other things equal
law of supply
as price rises, the quantity supplied rises, as price falls, the quantity supplied falls
supply curve
shows direct relationship between price and quantity supplied
determinants of supply
assumed to be held constant: resource prices, technology, taxes ad subsidies, prices of other goods, price expectations, and number of sellers in the market
change in supply
change in the schedule, shifts curve left or right , caused by one or more determinants of supply
change in quantity supplied
movement from one point to anotheron supply curve; caused by a change in price of product
surplus
excess supply
shortage
excess demand
equilibrium price
no shortage or surplus
equilibrium quantity
balance of quantity supplied and quantity demanded
rationing function of prices
the ability of competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent
price ceiling
maximum legal price a seller may charge or a product or service
price floor
minimum price fixed by the government
market
an institution or mechanism that brings together buyers and sellers of particular goods, services, or resources
demand
a schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase as each of a series of possible prices during a specified period of time
demand schedule
shows demand for a single customer
law of demand
all else equal, as price falls, the quantity demanded rises and as prices rise, the quantity of demand falls
diminishing marginal utility
in any specific time period, each buyer of a product will derive less satisfaction from each successive unit of the product consumed
income effect
a lower price increases the purchasing power of a buyer's money income, enabling him or her to buy more
substitution effect
at a lower price buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive
demand curve
the inverse relationship between price and quantity demanded for any product
determinants of demand
assumed to be constant when drawing demand curve: consumer's preference, # of consumers in market, consumers' incomes, prices of related goods, and consumers expectations about future prices and incomes
normal goods
products whose demand caries directly with money income
inferior goods
products whose demand caries inversely with money income
substitute goods
one that can be used in place of another good
complementary goods
one that is used together with another good
change in demand
shift of the demand curve to the right or left
change in quantity demanded
change from one point to another of the demand curve, caused by and increase or decrease of price
supply
schedule or curve showing the amounts of a product that producers are willing and able to make available for sale during a specific period
supply schedule
single product; quantities of a product that will be supplied at various prices, other things equal
law of supply
as price rises, the quantity supplied rises, as price falls, the quantity supplied falls
supply curve
shows direct relationship between price and quantity supplied
determinants of supply
assumed to be held constant: resource prices, technology, taxes ad subsidies, prices of other goods, price expectations, and number of sellers in the market
change in supply
change in the schedule, shifts curve left or right , caused by one or more determinants of supply
change in quantity supplied
movement from one point to anotheron supply curve; caused by a change in price of product
surplus
excess supply
shortage
excess demand
equilibrium price
no shortage or surplus
equilibrium quantity
balance of quantity supplied and quantity demanded
rationing function of prices
the ability of competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent
price ceiling
maximum legal price a seller may charge or a product or service
price floor
minimum price fixed by the government