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Chapter 7- Demand and Supply
Vocab
31
Economics
9th Grade
11/30/2008

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Term
Demand
Definition
the amount of a good or service that consumers are able and willing to buy at various possible prices during a specified time period
Term
Supply
Definition
the amount of a good or service that producers are able and willing to sell at various prices during a specified time period
Term
Market
Definition
the process of freely exchanging goods and services between buyers and sellers
Term
Voluntary Exchange
Definition
a transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange
Term
Law of Demand
Definition
economic rule stating that the quantity demanded and price move in opposite directions
Term
Quantity Demanded
Definition
the amount of a good or service that a consumer is willing and able to purchase at a specific price
Term
Real Income Effect
Definition
economic rule staing that individuals cannot keep buying the same quantity of a product if its price rises while their income stays the same
Term
Substitution Effect
Definition
economic rule stating that if 2 items satisfy the same need and the price of one rises, people will buy more of the other
Term
Utility
Definition
the ability of any good or service to satisfy consumer wants
Term
Marginal Utility
Definition
an additional amount of satisfaction
Term
Law of Diminishing Marginal Utility
Definition
rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased
Term
Demand Schedule
Definition
table showing quantities demanded at different possible prices
Term
Demand Curve
Definition
downward-sloping line that shows in graph form the quantities demanded at each possible price
Term
Complementary Good
Definition
a product often used with another product
Term
Elasticity
Definition
economic concept dealing with consumers' responsiveness to an increase or decrease in the price of a product
Term
Price Elasticity of Demand
Definition
economic concept that deals with how much demand varies according to changes in price
Term
Elastic Demand
Definition
situation in which a given rise or fall in a product's price greatly affects the amount people are willing to buy
Term
Inelastic Demand
Definition
situation in which a product's price change has little impact on the quantity demanded by consumers
Term
Law of Supply
Definition
economic rule stating that price and quantity supplied move in the same direction
Term
Quantity Supplied
Definition
the amount of a good or service that a producer is willing and able to supply at a specific price
Term
Supply Schedule
Definition
table showing quantities supplied at different possible prices
Term
Supply Curve
Definition
upward-sloping line that shows in graph form the quantities supplied at each possible price
Term
Technology
Definition
the use of science to develop new products and new methods for producing and distributing goods and services
Term
Law of Diminishing Returns
Definition
economic rule that says as more units of a factor of production are added to other factors of production, after some point total output continues to increase but at a diminishing rate
Term
Equilibrium Price
Definition
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
Term
Shortage
Definition
situation in which the quantity demanded is greater than the quantity supplied at the current price
Term
Surplus
Definition
situation in which quantity supplied is greater than quantity demanded at the current price
Term
Price Ceiling
Definition
a legal maximum price that may be chargeed for a particular good or service
Term
Rationing
Definition
the distribution of goods and services based on something other than price
Term
Black Market
Definition
"underground" or illegal market in which goods are traded at prices above their legal maximum prices or in which illegal goods are sold
Term
Price Floor
Definition
a legal minimum price below which a good or service may not be sold
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