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Chapter 2: Demand and Supply
Economics: The Basics
29
Economics
Undergraduate 1
08/24/2010

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Term
Market economy
Definition
An economic system made up of smaller buliding blocks of individual markets for trading all the different goods and services used in a country.
Term
Price
Definition
The rate at which the buyer and seller exchange money for a good or service.
Term
Labor market
Definition
The market where workers sell time on the job in exchange for money.
Term
Local market
Definition
A market where buyers and sellers are geographically close to each other.
Term
National market
Definition
A market where buyers and sellers can be in different parts of a country.
Term
Global markets
Definition
A market where buyers and sellers can be located anywhere in the world.
Term
Multinational
Definition
A business that operates in multiple countries.
Term
Market price
Definition
The typical price at which a good or service sells.
Term
Sale price
Definition
A price intentionally set below the market price to stimulate purchases.
Term
Negotiated prices
Definition
A price that is determined on a case-by-case basis as a result of negotiation between individual buyers and sellers.
Term
Volume discount
Definition
A price set below the market price to reward buyers who purchase a large quantity of items. 
Term
Advance purchase discount
Definition
A reduced price given for buying in advance, so that prices differ according to when purchases are made.
Term
Quantity demanded
Definition
The amount of a good or service that a buyer is willing to purchase at a given price.
Term
Demand schedule
Definition
The link between a buyer's quantity demanded and the price.
Term
Market demand schedule
Definition
A sum of the demand schedules for all the individual buyers in a market.
Term
Ceteris paribus
Definition
A Latin phrase meaning "all other things equal".
Term
Law of Demand
Definition
The tendency of quantity demanded to rise if the price falls, all other things being equal.
Term
Zero price
Definition
Occurs when an additional unit of a good or service is offered at no cost to buyers.
Term
Satiation
Definition
The point at which the value of additional consumption of a good or service goes to zero.
Term
Opportunity cost
Definition
The value or benefit of the next-best alternative use of money or time.
Term
Demand curve
Definition
A line on a graph showing the link between price and quantity demanded.
Term
Downward-sloping demand curve
Definition
A demand curve that is consistent with the law of demand, so that an increase in price leads to a decline in quantity demanded. As a result, the line slopes down when read from left to right.
Term
Quantity supplied
Definition
The amount of a good or service that a seller is willing to supply at a given price.
Term
Supply schedule
Definition
The link between a seller's quantity supplied and the market price.
Term
Market supply schedule
Definition
The sum of the supply schedules for all the individual suppliers in a market.
Term
Law of Supply
Definition
The tendency of quantity supplied to rise if the price rises, all other things being equal.
Term
Supply curve
Definition
A line on a graph showing the link between price and quantity supplied.
Term
Upward-sloping supply curve
Definition
A supply curve that is consistent with the law of supply, so that an increase in price leads to an increase in quantity supplied. As a result, the line slopes up when read from left to right.
Term
New markets
Definition
Markets with new products and services, or markets that include mostly new buyers and sellers.
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