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Details Title: Macro Description: Chap. 3 Total Flash Cards: 28 Created: 07/11/2006 20:43:42	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 buyer's reservation price Definition the highest price that a buyer is willing to pay for a given quantity of a good Term buyer's surplus Definition the difference between a buyer's reservation price and the market price Term cash on the table Definition the result of there being a difference between the buyer's reservation price and the seller's reservation price Term change in demand Definition change in the amount buyers are willing and able to purchase at every price Term change in quantity demanded Definition the response of buyers to change the price of a good Term change in quantity supplied Definition movement along the supply curve Term change in supply Definition a change in the amount sellers are willing and able to offer for sale at every price Term complements Definition a pair of goods in which an increase in the price of one good will cause a decrease in the demand for the other good Term demand curve Definition a graph that shows the quantity of a good that buyers wish to buy and are able to buy at each possible price holding everything other than price constant Term economic efficiency Definition the concept of all markets producing the socially optimal quantity of a good Term equilibrium Definition a state of affairs where nothing will change unless it is disturbed by an outside force Term equilibrium price Definition a price at which the quantity of a good that buyers wish to buy and are able to buy equals the quantity of a good that sellers wish to sell and are able to sell Term equilibrium quantity Definition the name of a quantity at which the quantity of a good that buyers wish to buy and are able to buy equals the quantity of a good that sellers wish to sell and are able to sell Term excess demand Definition a situation where the quantity demand exceeds the quantity supplied at a given price Term excess supply Definition a situation where the quantity supplied exceeds the quantity demanded at a given price Term income effect Definition a decrease in the price of a good allows buyers to purchase a large quantity of that good with the same income Term inferior good Definition a type of good where the amount buyers are willing and able to purchase at every price falls when buyer's income rises Term market Definition a group of buyers and sellers of a single good who interact through prices Term market equilibrium Definition the condition of the market when the quantity of a good buyers wish to buy and are able to buy equals the quantity of a good that sellers wish to sell and are able to sell Term normal good Definition the type of good where the amount buyers are willing and able to purchase at every price rises when buyer's income rises Term price ceiling Definition a maximum price at which buyers and sellers can make exchanges legally Term seller's reservation price Definition the lowest price that the seller is willing to recieve for a given quantity of a good Term seller's surplus Definition the difference between the market price and the seller's reservation price Term social optimal quantity Definition a quantity at which there is no difference between buyer's reservation price and sellers' reservation price Term substitutes Definition a pair of goods in which an increase in the price of one good will cause an increase in the demand for the other good Term substituion effect Definition a decrease in the price of a good causes people to increase their purchase of the good and buy less of another good Term supply curve Definition a graph that shows the quantity of a good that sellers wish to sell and are able to sell at each possible price holding everything other than price constant Term total surplus Definition the difference between the buyer's reservation price and the seller's reservation price