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Ch. 4-Market Forces of Supply & Demand
N/A
20
Economics
Undergraduate 2
12/08/2015

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Term
Market
Definition
A group of buyers & sellers of a particular good or service.
Term
Competitive Market
Definition
A market in which there are many buyers & many sellers so that each has a negligible impact on the market price.
Term
Quantity Demanded
Definition
The amount of a good that buyers are willing & able to purchase.
Term
Law of Demand
Definition
The claim that, other things being 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 & the quantity demanded.
Term
Demand Curve
Definition
A graph of the relationship between the price of a good & the quantity demanded.
Term
Normal Good
Definition
A good for which, other things being equal, an increase in income leads to an increase in demand.
Term
Inferior Good
Definition
A good for which, other things being 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 demand for the other.
Term
Complements
Definition
Two goods for which an increase in the price of one leads to a decrease in demand for the other.
Term
Quantity Supplied
Definition
The amount of a good that sellers are wiling & able to sell.
Term
Law of Supply
Definition
The claim that, other things being 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 & the quantity supplied.
Term
Supply Curve
Definition
A graph of the relationship between the price of a good & 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 & quantity demanded.
Term
Equilibrium Quantity
Definition
The quantity supplied & 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 the quantity supplied.
Term
Law of Supply & Demand
Definition
The claim that the price of any good adjusts to bring the quantity supplied & the quantity demanded for that good into balance.
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