| Term | Definition |
|---|
| market | any place where people come together to buy and sell goods or services |
| demand | willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period |
| law of demand | law stating that as the price of a good increases, the quantity demanded of the good decreases, and that as the price of a good decreases, the quantity demanded of the good increases |
| quantity demanded | number of units of a good purchased at a specific price |
| law of diminishing marginal utility | law stating that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good decreases |
| demand schedule | numerical representation of the law of demand |
| demand curve | graphical representation of the law of demand |
| normal good | good for which the demand rises as income rises and falls as income falls |
| inferior good | good for which the demand falls as income rises and rises as income falls |
| neutral good | good for which the demand remains unchanged as income rises or falls |
| substitute | similar good; price of one and the demand for the other move in the same direction |
| complement | good that is consumed jointly with another good; price of one and the demand for the other move in opposite directions |
| elasticity of demand | relationship between the percentage change in quantity demanded and the percentage change in price |
| elastic demand | type of demand that exists when the percentage change in quantity demanded is greater than the percentage change in price |
| inelastic demand | type of demand that exists when the percentage change in quantity demanded is less than the percentage change in price |
| unit-elastic demand | type of demand that exists when the percentage change in quantity demanded is the same as the percentage change in price |
| supply | willingness and ability of seller to produce and offer to sell different quantities of a good at different prices during a specific time period |
| law of supply | law stating that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases |
| direct relationship | relationship between two factors in which the factors move in the same direction |
| quantity supplied | number of units of a good produced and offered for sale at a specific price |
| supply schedule | numerical chart illustrating the law of supply |
| supply curve | graph that shows the amount of a good sellers are willing and able to sell at various prices |
| technology | body of skills and knowledge concerning the use of resources in production |
| advancement in technology | ability to produce more output with a fixed amount of resources |
| per-unit cost | average cost of a good |
| subsidy | financial payment made by government for certain actions |
| quota | legal limit on the number of units of a foreign-produced good (import) that can enter a country |
| elasticity of supply | relationship between the percentage change in quantity supplied and the percentage change in price |
| elastic supply | kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price |
| inelastic supply | kind of supply that exists when the percentage change in quantity supplied is less than the percentage change in price |
| surplus | the condition in which the quantity supplied of a good is greater than the quantity demanded |
| shortage | condition in which the quantity demanded of a good is greater than the quantity supplied |
| equilibrium | in a market the point at which the quantity of a good that buyers are willing and able to buy is equal to the quantity that sellers are willing and able to produce and offer for sale |
| equilibrium quantity | quantity of a good that is bought and sold in a market that is in equilibrium |
| equilibrium price | price at which a good is bought and sold in a market that is in equilibrium |
| inventory | stock of goods that a business or store has on hand |
| price ceiling | legislated price-set lower than the equilibrium price-above which buyers and sellers cannot legally buy and sell a good |
| price floor | legislated price-set above the equilibrium price-below which buyers and sellers cannot legally buy and sell a good |
Combine with other sets
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