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Microecon
Chapter 3 vocab
| Term | Definition |
|---|---|
| Competitive market | market in which there are many buyers and sellers of the same good or service |
| Supply and demand model | model of how competitive a market behaves |
| Demand schedule | shows how much of a good or service consumers will want to buy at different prices |
| Quantity demanded | the actual amount of a good or service consumers are willing to buy at some specific price |
| Demand curve | a graphical representation of the demand schedule; shows the relationship between quantity demanded and price |
| Law of demand | says that a higher price for a good or service, other things equal, leads people to demand a smaller quantity of that good or service |
| Shift of the demand curve | a change in the quantity demanded at any given price, represented by the change of the original demand curve to a new position |
| Movement along the demand curve | change in the quantity demanded of a good arising from a change in the good's price |
| Substitutes | Two goods are this if a rise in the price of one of the goods leads to an increase in the demand for the other good |
| Complements | Two goods are this if a rise in the price of one good leads to a decrease in the demand for the other good |
| Normal good | when a rise in income increases the demand for this kind of good |
| Inferior good | when a rise in income decreases the demand for this kind of good |
| Individual demand curve | shows the relationship between quantity demanded and price for an individual consumer |
| Quantity supplied | the actual amount of a good or service people are willing to sell at some specific price |
| Supply schedule | shows how much of a good or service people are willing to sell at some specific price |
| Supply curve | shows the relationship between quantity supplied and price |
| Shift of the supply curve | a change in the quantity supplied of a good or service at a given price; shown by the change of original supply curve to a new position |
| Input | good or service that is used to produce another good or service |
| Movement along the supply curve | change in the quantity supplied of a good arising from a change in the good's price |
| Individual supply curve | shows the relationship between quantity supplied and price for an individual producer |
| Equilibrium price | price that matches the quantity supplied and quantity demanded |
| Equilibrium quantity | quantity bought and sold at that price; also called market price("price that clears the market") |
| Surplus | happens to a good or service when the quantity supplied exceeds the quantity demanded; when price is above its equilibrium level |
| Shortage | happens to a good or service when the quantity demanded exceeds the quantity supplied; this occurs when price is below its equilibrium level |
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