Chapter 2 - Competitive Markets

Question 0

Sub-market

Answer 0

A recognised or distinguishable part of a market. Also known as a market segment.

Question 1

Market

Answer 1

Where or when buyers and sellers meet to trade or exchange products

Question 2

Demand

Answer 2

The quantity of a product that consumers are able and willing to purchase at various prices over a period of time

Question 3

Notional demand

Answer 3

The desire for a product

Question 4

Effective demand

Answer 4

The willingness and ability to buy a product

Question 5

Ceteris paribus

Answer 5

Assuming other variables remain unchanged

Question 6

Demand curve

Answer 6

This shows the relationship between the quantity demanded and the price of a product

Question 7

Demand schedule

Answer 7

The data that is used to draw the demand curve for a product

Question 8

Movement along the demand curve

Answer 8

This is in response to a change in the price of a product

Question 9

Consumer surplus

Answer 9

The extra amount that a consumer is willing to pay for a product above the price that is actually paid

Question 10

Disposable income

Answer 10

Income after taxes on income have been deducted and state benefits have been added

Question 11

Real disposable income

Answer 11

Disposable income and result has been adjusted to take into account changed in the price level

Question 12

Normal goods

Answer 12

Goods for which an increase in income leads to an increase in demand

Question 13

Inferior goods

Answer 13

Goods for which an increase in income leads to a fall in demand

Question 14

Substitutes

Answer 14

Competing goods

Question 15

Complements

Answer 15

Goods for which there is joint demand

Question 16

Change in demand

Answer 16

This is where a change in a non-price factor leads to an increase or decrease in demand for a product

Question 17

Supply

Answer 17

The quantity of a product that producers are willing and able to provide at different market prices over a period of time

Question 18

Profit

Answer 18

The difference between the total revenue of a producer and cost

Question 19

Supply curve

Answer 19

This shows the relationship between the quantity supplied and the price of a product

Question 20

Supply schedule

Answer 20

The data used to draw up the supply curve of a product

Question 21

Producer surplus

Answer 21

The difference between the price a producer is willing to accept and what is actually paid

Question 22

Change in supply

Answer 22

Occurs when a change in a non-price influence leads to an increase or decrease in the willingness of a producer to supply a product

Question 23

Price

Answer 23

The amount of money that is paid for a given amount of a particular good or service

Question 24

Equilibrium price/clearing price

Answer 24

The price where demand and supply are equal

Question 25

Equilibrium quantity

Answer 25

The quantity that is demanded and supplied at the equilibrium price

Question 26

Disequilibrium

Answer 26

Any position where demand and supply are not equal

Question 27

Surplus

Answer 27

An excess of supply over demand

Question 28

Shortage

Answer 28

An excess if demand over supply