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Principles of Macroeconomics- Chp. 3
Chapter Three--Definitions
21
Economics
Undergraduate 2
12/03/2011

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Term
Perfectly Competitive Market
Definition
a market that meets the condition of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market
Term
Demand Schedule
Definition
a table showing the relationship between the price of a product and the quantity of the product demanded
Term
Quantity Demanded
Definition
the amount of a good or service that a consumer is willing and able to purchase at a given price
Term
Demand Curve
Definition
a curve that shows the relationship between the price of a product and the quantity of the product demanded
Term
Market Demand
Definition
the demand by all the consumers of a given good or service
Term
Law of Demand
Definition
the rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease
Term
Ceteris Paribus ("all else equal") Condition
Definition
the requirement that when analyzing the relationship between two variables--such as price and quantity demanded--other variables must be held constant
Term
Normal Good
Definition
a good for which the demand increases as income rises and decreases as income falls
Term
Inferior Good
Definition
a good for which the demand increases as income falls and decreases as income rises
Term
Substitutes
Definition
goods and services that can be used for the same purpose
Term
Complements
Definition
goods and services that are used together
Term
Demographics
Definition
the characteristics of a population with respect to age, race, and gender
Term
Quantity Supplied
Definition
the amount of a good or service that a firm is willing and able to supply at a given price
Term
Supply Schedule
Definition
a table that shows the relationship between the price of a product and the quantity of the product supplied
Term
Supply Curve
Definition
a curve that shows the relationship between the price of a product and the quantity of the product supplied
Term
Law of Supply
Definition
the rule that, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied
Term
Technological Change
Definition
a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs
Term
Market Equilibrium
Definition
a situation in which quantity demanded equals quantity supplied
Term
Competitive Market Equilibrium
Definition
a market equilibrium with many buyers and many sellers
Term
Surplus
Definition
a situation in which the quantity supplied is greater than the quantity demanded
Term
Shortage
Definition
a situation in which the quantity demanded is greater than the quantity supplied
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