3. Price Determination In A Competitve Maket

Question 1

Market

Answer 1

A voluntary meeting of buyers and sellers with exchange taking place

Question 2

Demand

Answer 2

Quantity of goods consumers are able and willing to buy in a given period of time

Question 3

Supply

Answer 3

Quantity of goods producers are willing and able to sell at given prices in a period of time

Question 4

Competitive markets

Answer 4

Markets in which the large number of buyers and sellers possess good market and can easily enter or leave markets

Question 5

Ruling market price or equilibrium price

Answer 5

Price at which planned demand equals planned supply

Question 6

Effective demand

Answer 6

Desire for a good backed by the ability to pay

Question 7

Market demand

Answer 7

Quantity of a good or service that all consumers are willing and able to buy

Question 8

Individual demand

Answer 8

Quantity of a good or service that a particular consumer is willing or able to buy

Question 9

Condition of demand

Answer 9

A determinant of demand other than the goods own price that fixes the position of the demand curve

Question 10

Substitute goods

Answer 10

Alternative goods that can be used for the same purpose

Question 11

Complementary goods

Answer 11

When two goods are complements they experience joint demand

Question 12

Increase in demand

Answer 12

Rightward shift of the demand curve

Question 13

Decrease in demand

Answer 13

Leftward shift of the demand curve

Question 14

Normal good

Answer 14

Demand increases as income rises and demand decreases as income falls

Question 15

Inferior good

Answer 15

Demand decreases as income rises and demand increases as income falls

Question 16

Elasticity

Answer 16

Proportionate responsiveness of a second variable to an initial change in the first variable

Question 17

Price elasticity of demand

Answer 17

Measures the extent to which the demand for a good changes in response to a change in the price of that good

Question 18

Short run

Answer 18

Time period in which at least one factor of production is fixed and cannot be varied

Question 19

Long run

Answer 19

Time period in which no factors of production are fixed and in which all the factors are vairex

Question 20

Income elasticity of demand

Answer 20

Measures the extent to which the demand for a good changes in response to a change in incoem

Question 21

Cross elasticity of demand

Answer 21

Measures the extent to which the demand for a good changes in response to a change in price of another good

Question 22

Market supply

Answer 22

Quantity of a good that all the firms in a market plan to sell at given price in a given period of time

Question 23

Profit

Answer 23

Difference between total sales revenue and total costs of production

Question 24

Total revenue

Answer 24

Money received by a firm from selling an output

Question 25

Conditions of supply

Answer 25

A determinant of supply other than the goods own price that fixes the position of the supply curve

Question 26

Increase in supply

Answer 26

Rightward shift of supply curve

Question 27

Decrease in supply

Answer 27

Leftward shift of the supply curve

Question 28

Price elasticity of supply

Answer 28

Measures the extent to which the supply of a good changes in response to a change in the price of that good

Question 29

Market equilibrium

Answer 29

When planned demand equals planned supply

Question 30

Market disequilibrium

Answer 30

Exists at any price other than equilibrium price

Question 31

Equilibrium

Answer 31

State of rest between opposing forces

Question 32

Disequilibrium

Answer 32

Opposing forces out of balance

Question 33

Excess supply

Answer 33

When firms wish to sell more than consumers wish to buy. Price above equilibrium price

Question 34

Excess demand

Answer 34

When consumers wish to buy more than firms wish to sell. Price below equilibrium price

Question 35

Joint demand

Answer 35

When one good is produced, another good is produced from same raw materials such as a by product

Question 36

Composite

Answer 36

Demand for a good which has more than one use - increase in demand for one use decreases the demand for another

Question 37

Derived demand

Answer 37

Demand for a good or factor of production demanded as a consequence of the demand for something else