5-7 Flashcards
Market Structure
the nature and degree of competition among firms operating in the same industry.
Perfect Competition
a market structure in which a large number of firms all produce the same product
Monopoly
a market in which there are many buyers but only one seller
Oligopoly
a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors
Monopolistic Competition
a market structure in which many companies sell products that are similar but not identical
Market Failure
a situation in which a market left on its own fails to allocate resources efficiently
Externality
an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
Public Goods
Goods; such as clean air and clean water; that everyone must share
Market Equilibrium
the point at which the quantity of a product demanded by consumers in a market equals the quantity supplied by producers
Equilibrium price
the price at which the quantity of a product demanded by consumers equals the quantity supplied by producers
Equilibrium Quantity
the quantity of a good or service demanded by consumers and supplied by producers when the market is in equilibrium
Price controls
government imposed limits on the prices that producers may charge in the market
Price floor
a minimum price set by the government to prevent prices from going too low
Price ceiling
a maximum price set by the government to prevent prices from going too high
rationing
the controlled distribution of a limited supply of a good or service
black market
an illegal market in which goods are traded at prices or in quantities higher than those set by the law
demand
The quantity of a good or service that consumers are both willing and able to buy at various prices.
law of demand
An economic law stating that as the price of a good or services increases; the quantity demanded decreases; and vise versa. Generally consumers are happier to buy goods and services at lower prices than at higher prices
supply
The quantity of a good or services that producers are willing and able to offer for sale at various prices.
law of supply
An economic law stating that as the price of a good or service increases; the quantity supplied increases; and vice versa. Generally; producers are happier to offer goods and services at higher prices than at lower prices
revenue
The amount of money a firm receives in the course of doing business. Revenue is calculated by multiplying the quantity sold by the price.
elasticity
A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price.
substitute good
A product that satisfies the same basic want as another product.
complementary good
A product that is used or consumed jointly with another product.
