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principles of microeconomics sixth edition
Chapter Four
20
Economics
Undergraduate 1
09/14/2011

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Term
market
Definition
a group of buyers and sellers of a particular good or service
Term
competitive market
Definition
a market in which there are many buyers and many sellers so that each has a negligible impact on the market place
Term
quantity demanded
Definition
the amount of a good that buyers are willing and able to purchase
Term
law of demand
Definition
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
Term
demand schedule 
Definition
a table that shows the relationship between the price of a good and the quantity demanded
Term
demand curve
Definition
a graph of the relationship between the price of a good and the quantity demanded
Term
normal good
Definition
a good for which, other things equal, an increase in income leads to an increase in demand
Term
inferior good
Definition
a good for which, other things equal, an increase in income leads to a decrease in demand
Term
substitutes
Definition
two goods for which an increase in the price of one leads to an increase in the demand for the other
Term
complements
Definition
two good for which an increase in the price of one leads to a decrease in the demand for the other
Term
quantity supplied
Definition
the amount of a good that sellers are willing and able to sell
Term
law of supply
Definition
the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
Term
supply schedule
Definition
a table that shows the relationship between the price of a good and the quantity supplied
Term
supply curve
Definition
a graph of the relationship between the price of good and the quantity supplied 
Term
equilibrium
Definition
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
Term
equilibrium price
Definition
the price that balances quantity supplied and quantity demanded
Term
equilibrium quantity
Definition
the quantity supplied and the quantity demanded at the equilibrium price
Term
surplus 
Definition
a situation in which quantity supplied is greater than quantity demanded 
Term
shortage
Definition
a situation in which quantity demanded is greater than quantity supplied
Term
law of supply and demand
Definition
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
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