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Ch. 4 The Market Forces of Supply and Demand
for exam 1
22
Economics
Undergraduate 1
02/08/2011

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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 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 and able to purchase
Term
law of demand
Definition
the claim that, other things equal, the quantity demanded of a good falls when teh 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 relationshp between the price of a godo and teh quantity demanded
Term
what can cause a shift in the demand curve?
Definition
income, prices of related goods, tastes, expectations, numbere of buyers.
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
What can cause a shift in the supply curve?
Definition
input prices, technology, expectations, number of sellers
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 supllied 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
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 food for, which other things equal, an increase in income leads to a decrease in demand. i.e. bus rides vs. buying a car. bus rides is an inferior good
Term
substitutes
Definition
two goods for which an increase in the price of one leads to an incrase in the demand for the other
Term
complements
Definition
two goods for which an increase in the price of one leads to a decrease in the demand for the other
Term
shortage
Definition
a situation in whcih 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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