Term
|
Definition
| The market for any good consists of all buyers and sellers of that good. |
|
|
Term
|
Definition
| A Schedule or graph showing the quantity of a good that buyers wish to buy at each price. |
|
|
Term
|
Definition
| The change in the quantity demanded of a good that results because buyers switch to or from substitutes when the price of the good changes. |
|
|
Term
|
Definition
| The change in the quantity demanded of a good that results because a change in the price of a good changes the buyer's purchasing power. |
|
|
Term
| Buyer's Reservation Price |
|
Definition
| The largest dollar amount the buyer would be willing to pay for a good. |
|
|
Term
|
Definition
| A graph or schedule showing the quantity of a good that sellers wish to sell at each price. |
|
|
Term
| Seller's Reservation Price |
|
Definition
| The smallest dollar amount for which a seller would be willing to sell an additional unit, generally equal to marginal cost. |
|
|
Term
|
Definition
| A balanced or unchanging situation in which all forces at work within a system are canceled by others. |
|
|
Term
| Equilibrium Price and Equilibrium Quantity |
|
Definition
| The values of price and quantity for which quantity for which quantity supplied and quantity demanded are equal. |
|
|
Term
|
Definition
| Occurs in a market when all buyers and sellers are satisfied with their respective quantities at the market price. |
|
|
Term
|
Definition
| The amount by which quantity supplied exceeds quantity demanded when the price of a good exceeds the equilibrium price. |
|
|
Term
|
Definition
| The amount by which quantity demanded exceeds quantity supplied when the price of a good lies below the equilibrium price. |
|
|
Term
|
Definition
| A maximum allowable price, specified by law. |
|
|
Term
| Change in the Quantity Demanded |
|
Definition
| A movement along the demand curve that occurs in response to a change in price. |
|
|
Term
|
Definition
| A shift of the entire demand curve. |
|
|
Term
|
Definition
| A shift of the entire supply curve. |
|
|
Term
| Change in the Quantity Supplied |
|
Definition
| A movement along the supply curve that occurs in response to a change in price. |
|
|
Term
|
Definition
| Two goods are compliments in consumption if an increase in the price of one causes a leftward shift in the demand curve for the other (or if a decrease causes a rightward shift). |
|
|
Term
|
Definition
| Two goods are substitutes in consumption if an increase in the price of one causes a rightward shift in the demand curve for the other (or if a decrease causes a leftward shift). |
|
|
Term
|
Definition
| A good whose demand curve shifts rightward when the income of buyers increase and leftward when the incomes of buyers increase and leftward when the incomes of buyers decrease. |
|
|
Term
|
Definition
| A good whose demand curve shifts leftward when the incomes of buyers increase and rightward when the incomes of buyers decrease. |
|
|
Term
|
Definition
| The difference between the buyer's reservation price and the price he or she actually pays. |
|
|
Term
|
Definition
| The difference between the price received by the seller and his or her reservation price. |
|
|
Term
|
Definition
| The difference between the buyer's reservation price and the seller's reservation price. |
|
|
Term
|
Definition
| Economic metaphor for unexploited gains from exchange. |
|
|
Term
| Socially Optimal Quantity |
|
Definition
| The quantity of a good that results in the maximum possible economic surplus from producing and consuming the good. |
|
|
Term
| Efficiency (or Economic Efficiency) |
|
Definition
| A condition that occurs when all goods and services are produced and consumed at their respective socially optimal levels. |
|
|
Term
|
Definition
| Efficiency is an important social goal because when the economic pie grows larger, everyone can have a larger slice. |
|
|
Term
| The Equilibrium Principle ("The No-Cash-on-the-Table Principle") |
|
Definition
| A market in equilibrium leaves no unexploited opportunities for individuals but may not exploit all gains achievable through collective action. |
|
|
