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Chapter 04
Brief Principles of Macroeconomics Vocabulary
20
Economics
Undergraduate 2
10/12/2013

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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 the price of the good rises
Term
Demand Schedule
Definition
A table that show 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 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 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 a 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 a relationship between the price of a good and the quantity supplied
Term
Equalibrium
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 equlibrium price
Term
Surplus
Definition
A situation in which quantity supplied is greater than the quantity demanded
Term
Shortage
Definition

A situation in which quantity demand

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.

Term
Complements
Definition
Two goods for which an increase in the price of one leads to a decrease in the demand for the other
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