| Term | Definition |
|---|
| Demand | A schedule showing how many units of a good or service, measured homogenously that consumers are willing and able to purchase over a series of prices in a specified time frame, ceterius paribus. |
| Quantity Demanded | How many units of a good or service consumers are willing and able to buy at one specified price. |
| Law of Demand | There is an inverse relationship between price and quantity demanded, so that as price rises (falls), quantity demanded falls (rises). |
| Determinants of Demand | Anything other than price of the current item that influences consumer buying decisions, including income, tastes and preferences, price of related items (substitutes and complements), number of consumers in the market, and expected future price. |
| Determinant of Quantity Demanded | Price of the current item being demanded. |
| Normal Goods | A good for which demand will rise (fall) as income rises (falls). Examples include steaks, new clothes, etc. |
| Inferior Goods | As good for which demand will rise (fall) as incomes falls (rises), Examples include generic products, bus tickets, etc. |
| Substitute Goods | Goods used in place of each other so that as price of the first good rises (falls), demand for the second or substitute good will also rise (fall). Examples include Coke and Pepsi, butter and margarine, etc. |
| Complement Goods | Goods used together so that as price of the first good rises (falls), demand for the second or complement good will fall (rise.) Examples include razors and razor blades, coffee and cream or sugar, etc. |
| Change in Demand | Caused by a change in a determinant of demand and shown by drawning a new demand curve. |
| Change in Quantity Demanded | Caused by a change in price of the current item and shown by movement along the existing demand curve. |
| Supply | A schedule showing how many units of a good or service, measured homogenously that producers are willing and able to offer for sale over a series of prices in a specified time frame, ceterius paribus. |
| Quantity Supplied | How many units of a good or service producers are willing and able to offer for sale at one specified price. |
| Law of Supply | There is a direct relationship between price and quantity supplied, so that as price of an item rises (falls), quantity supplied of that item will rise (fall). |
| Gut Rule of Supply | If an event makes a supplier happy (unhappy), he/she will offer more (less) of his/her product for sale. |
| Determinants of Supply | Anything other than price of the current item that influences production decisions, including cost of raw materials, cost of labor, level of technology used to produce, number of producers in the market, price of related products, and expected future price. |
| Determinant of Quantity Supplied | Price of the current item being supplied. |
| Change in Supply | Caused by a change in a determinant of supply and shown by drawning a new supply curve. |
| Change in Quantity Supplied | Caused by a change in price of the current item and shown by movement along the existing supply curve. |
| Equilibrium | The point at which quantity demanded equals quantity supplied and the maretk is cleared. All items offered for sale by producers are bought by consumers; there exists no surplus or shortage of items. |
| Demand Curve | A curve illustrating the relationship between price and quantity demanded. |
| Supply Curve | A curve illustrating the relationship between price and quantity supplied. |
| Market Demand | The sum of all individual demand in the market. |
| Market-Day Supply | A market situation in which the quantity of a good supplied is fixed, regardless of what happens to price. |
| Excess Supply | At a particular price, the situation where quantity supplied is greater than quantity demanded. |
| Excess Demand | At a particular price, the situation where quantity demanded is greater than quantity supplied. |
| Short Run | A period of insufficient time to alter all factors of production used in the productive process - at least one input is fixed (usually plant and equipment.) |
| Long Run | A period of sufficient time to alter all factors of production used in the productive process - all inputs can be changed. |
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