(4) The Market Forces of Supply and Demand Flashcards
a group of buyers and sellers of a particular good or service
market
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
competitive market
the amount of a good that buyers are willing and able to purchase
quantity demanded
the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises
law of demand
a table that shows the relationship between the price of a good and the quantity demanded
demand schedule
a graph of the relationship between the price of a good and the quantity demanded
demand curve
a good for which, other things equal, an increase in income leads to an increase in demand
normal good
a good for which, other things equal, an increase in income leads to a decrease in demand
inferior good
two goods for which an increase in the price of one leads to an increase in the demand for the other
substitutes
two goods for which an increase in the price of one leads to a decrease in the demand for the other
complements
the amount of a good that sellers are willing and able to sell
quantity supplied
the claim that, other things equal, the quantity supplied of good rises when the price of the good rises
law of supply
a table that shows the relationship between the price of a good and the quantity supplied
supply schedule
a graph of the relationship between the price of a good and the quantity supplied
supply curve
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
equilibrium
the price that balances quantity supplied and quantity demanded
equilibrium price
the quantity supplied and the quantity demanded at the equilibrium price
equilibrium quantity
a situation in which quantity supplied is greater than quantity demanded
surplus
a situation in which quantity demanded is greater than quantity supplied
shortage
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
law of supply and demand
