| Term | Definition |
|---|
| market | any place where people come together to buy and sell goods or services |
| demand | the willingness and ability of buyers to puchase different quantities of a good at different prices during a specific time period |
| law of demand | a law that states that as the price of a good increases, the quantity demanded of the good decreases, and as the price of a good decreases the quantity demanded of the good increases |
| quantity demanded | the number of units of a good purchased at a specific price |
| law of diminishing marginal utility | a 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 | the numerical representation of the law of demand |
| demand curve | the graphical representation of the law of demand |
| normal good | a good for which the demand rises as income rises and falls as income falls |
| inferior good | a good for which the demand falls as income rises and rises as income falls |
| neutral good | a good for which the demand remains unchanged as income rises or falls |
| substitute | a similar good, with __________ the price of one and the demand for the other more in the same direction |
| complement | a good that is consumed jointly with another good; with ________, the price of one and the demand for the other move in opposite directions |
| elasticity of demand | the relationship between the percentage change in the quantity demanded and the percentage change in quantity demanded is greater than the percentage change in price |
| inelastic demand | the type of demand that exists when the percentage change in quantity demanded is less than the percentage change in price |
| unit elastic demand | the type of demand that exists when the percentage change in quantity demanded is the same as the percentage change in price |
| supply | the willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period |
| law of supply | a law stating that is 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 | a relationship between two factors in which the factors move in the same direction; for example, as one factor rises, the other rises, too. |
| quantity supplied | the number of units of a good produced and offered for sale at a specific price |
| supply schedule | a numerical chart illustrating the law of supply |
| supply curve | a graph that shows the amount of a good sellers are willing and able to sell at various prices |
| technology | the body of skills and knowledge concerning the use of resources in production |
| advancement in technology | the ability to produce more output with a fixed amount of resources |
| per-unit cost | the average cost of a good; for example, if $400,000 is spent to produce 100 cars, the average, or ______, cost is $4,000 |
| subsidy | a financial payment made by government for certain actions |
| quota | a legal limit on the number of units of a foreign-produced good (import) that can enter a country |
| elasticity of supply | the relationship between the percentage change in quantity supplied and the percentage change in price |
| elastic supply | the kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price |
| inelastic supply | the 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; this only occurs at prices above the equilibrium price |
| shortage | the condition in which the quantity demanded of a good is greater than the quantity supplied; this occurs only at prices below equilibrium price |
| 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 (quantity demanded equals quantity supplied) |
| equilibrium quantity | the quantity of a good that is bought and sold in a market that is in equilibrium |
| inventory | the stock of goods that a business or store has on hand |
| price ceiling | a legislated price -- set lower than the equilibrium price -- above which buyers and sellers cannot legally buy and sell a good |
| price floor | a 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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