Perfectly competitive market
A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.
A table showing the relationship between the price of a product and the quantity of the product demanded
the amount of a good or service that a consumer is willing and able to purchase at a given price
a curve that shows the relationship between the price of a product and the quantity of the product demanded.
the demand by all the consumers of a given good or service.
law of demand
the rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of the product rises, the quantity demaded of the product will decrease
the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to the other goods that are substitutes
the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power.
Ceteris paribus ("all else equal")
the requirement that when analyzing the relationship between two variables - such as price and quantity demanded - other variables must be held constant
A good for which the demand increases as income rises and decreases as income falls.
a good for which the demand increases as income falls and decreases as income rises.
goods and services that can be used for the same purpose.
goods and services that are used together.
the characteristics of a population with respect to age, race, and gender.
the amount of a good or service that a firm is willing and able to supply at a given price
A table that shows the relationship between the price of a product and the quantity of the product supplied
a curve that shows the relationship between the price of a product and the quantity of the product supplied.
law of supply
The rule that, holding everything else constant, increases in price causes increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied.
a positive or negative change in the ability of a firm to produce a given level of output with a give quality or inputs.
a situation in which quantity demanded equals quantity supplied
competitive market equilibrium
a market equilibrium with many buyers and many sellers
a situation in which quantity supplied is greater than the quantity demanded
a situation in which the quantity demanded is greater than the quantity supplied