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Details Title: Chapter III Description: Terms and Concepts Total Flash Cards: 27 Created: 09/19/2006 23:48:47	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term change in demand Definition A change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right. Term change in quantity demanded Definition A movement from one point to another point–from one price-quantity combination to another–on a fixed demand schedule or demand curve. The cause of such a change is an increase or decrease in the price of the product under consideration. Term change in quantity supplied Definition A movement from one point to another on a fixed supply curve.The cause of such a movement is a change in the price of a specific product being considered. Term change in supply Definition A change in the quantity supplied of a good or service at every price; a shift of the demand curve to the left or right. Term complementary good Definition Products and services that are used together. When the price of one falls, the demand for the other increase (and conversely). Term demand Definition A schedule showing the amounts of a good or service that buyers (or a buyer) wish to purchase at various prices during some time period. Term demand curve Definition A curve illustrating demand. Term demand schedule Definition ? Term determinants of demand Definition Factors other than price that determine the quantities demanded of a good or service. Term determinants of supply Definition Factors other than price that determine the quantities supplied of a good or service. Term diminishing marginal utility Definition The principle that as successive increments of a variable resource are added to a fixed resource, the marginal product of the variable resource will eventually decrease. Term equilibrium price Definition The price in a competitive market at which the quantity demanded and the quantity supplied are equal, there is neither a shortage nor a surplus, and there is no tendency for price to rise or fall. Term equilibrium quantity Definition (1) The quantity demanded and supplied at the equilibrium price in a competitive market; (2) the profit maximizing output of a firm. Term income effect Definition A change in the quantity demanded of a product that resutls from the change in real income (purchasing power) produced by a change in the product's price. Term inferior goods Definition A good or service whose consumption declines as income rises (and conversely), price remaining constant. Term law of demand Definition The principle that, other things equal, an increase in a product's price will reduce the quantity of it demanded, and conversely for a decrease in price. Term law of supply Definition The principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied, and conversely for a price decrease. Term market Definition Any institution or mechanism that brings together buyers (demanders) and sellers (suppliers) of a particular good or service. Term normal goods Definition A good or service whose consuption increases when income increases and falls when income decreases, price remaining constant. Term rationing function of prices Definition The ability of market forces in competitive markets to equalize quantity demanded and quantity supplied and to eliminate shortages and surpluses via changes in prices. Term shortage Definition The maount by which the quantity demanded of a product exceeds the quantity supplied at a particular (below-equilibrium) price. Term substitute good Definition Products or services that can be used in place of each other. When the price of one falls, the demand for the other product falls,; conversely, when the price of one product rises, the demand for the other product rises. Term substitution effect Definition (1) A change in the quantity demanded of a consumer good that results from a change in its relative expensiveness produced by a change in the product's price; (2) the effect of a change in the price of a resource on the quantity of the resource emplyed by a firm, assuming no change in its output. Term supply Definition A schedule showing the amounts fo a good or service that sellers (or a seller) will offer at various prices during some period. Term supply curve Definition A curve illustrrating supply. Term supply schedule Definition ? Term surplus Definition The amount by which the quantity supplied of a product exceed the quantity demanded at a specific (above-equilibrium) price.