Chapter 3 Vocab Flashcards
Ceteris paribus
Other things being equal
Complements
Goods that are often used together so that consumption of the one good tends to enhance the consumption of the other
Consumer surplus
The extra benefit consumers received from buying a good/service; measured by what the individuals would have been willing to pay minus the amount actually paid
Deadweight loss
The loss in social surplus that occurs when a market produces inefficient quantity
Demand
Relationship between price and the quantity demanded of a good/service
Demand curve
(Top to bottom) A graphic representation of the relationship between price and quantity demanded of a good/service with quantity as the horizontal axis in price is vertical axis
Demand schedule
A table that shows a range of prices for a certain good or service and quantity demanded at each price
Equilibrium
The situation where quantity demanded is equal to quantity supplied; combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change
Equilibrium price
Price where quantity demanded is equal to quantity supplied
Equilibrium quantity
Quantity at which quantity demanded and quantity supplied is equal at a certain price level
Excess demand/shortage
At existing price, quantity demanded exceeds quantity supplied
Price ceiling
Legal maximum price
Price floor
Legal minimum price
Excess supply/surplus
At existing price, quantity supplied exceeds quantity demanded
Factors of production/ imputs
Resources such as labors, materials, machinery that are used to produce goods/services
Inferior good
A good in which quantity demand falls as income rises and quantity demanded rises when income falls
Law of demand
Common relationship where the higher the price the lower quantity demand of a good/service. Lower price leads to higher demand
Law of supply
Common relationship that the higher the price the greater quantity supplied. The lower the price leads to less quantity supplied
Normal good
Good in which quantity demanded rises as income rises and falls as income falls
Price
What buyer pays for a unit of a good/service
Price control
Government laws to regulate prices instead of market prices determining prices
Producer surplus
Extra benefit producers receive from selling a good/service (measured by the price the producers actually received minus the price the producer would have been willing to accept)
Quantity demanded
Total number of units of a good/service consumers are willing to purchase at a price
Quantity supplied
Total number of units of a good/service producers are willing to sell at a given price
Shift in demand
When a change in some economic (other than price) event causes a different quantity to be demanded at every price
Shift in supply
When a change in some economic (other than price) event causes a different quantity to be supplied at every price
Social surplus/economic surplus/ total surplus
The sum of consumer surplus and producer surplus
Substitute
A good that can replace another to some extent, so that greater consumption of one good can mean less of the other
Supply
The relationship between price and the quantity supplied of a good/service
Supply curve
(Bottom to top) A line that shows the relationship between price and quantity supplied on a graph with quantity supplied on the horizontal axis and price on the vertical access
Supply schedule
A table that shows a range of prices for a good or service and the quantity supply to each price
