| Term | Definition |
|---|
| demand | the desire to own something and the ability to pay for it |
| ceteris paribus | latin phrase that means "all other things held constant" |
| complements | two goods that are bought and used together |
| substitutes | goods used in place of one another |
| inelastic | describes demand that is not very sensitive to a change in price |
| supply | the amount of goods available |
| law of supply | tendency of suppliers to offer more of a good at a higher price |
| supply curve | graph of the quantity supplied of a good at different prices |
| diminishing marginal returns | level of production in which the marginal product of labor decreases as the number of workers increases |
| subsidy | a government payment that supports a business or market |
| price ceiling | a maximum price that can be legally charged for a good or service |
| price floor | a minimum price for a good or service |
| surplus | situation in which quantity supplied in greater than quantity demanded; also known as excess supplied |
| shortage | quantity demanded is greater than quantity supplied; also known as excess demand |
| search costs | financial and opportunity costs consumers pay when searching for a good or service |
| supply shock | sudden shortage of a good |
| rationing | system of allocating scarce goods and services using criteria other than price |
| black market | market in which goods are sold illegally |
| barrier to entry | any factor that makes it difficult for a new firm to enter a market |
| start-up costs | the expenses a firm must pay before it can begin to produce and sell goods |
| monopoly | market dominated by a single seller |
| economies of scale | factors that cause a producer's average cost per unit to fall as output rises |
| patent | a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time |
| price discrimination | division of customers into groups based on how much they will pay for a good |
| monopolistic competition | a market structure in which many companies sell products that are similar but not identical |
| non-price competition | a way to attract customers through style, service, or location, but not a lower price |
| price war | a series of competitive price cuts that lowers the market price below the cost of production |
| anti-trust laws | laws that encourage competition in the marketplace |
| deregulation | removal of some government controls over a market |
Combine with other sets
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