Chapter 4 Flashcards
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price
Competitive market
A group of buyers and sellers of a particular good or service
Market
The amount of a good that buyers are willing and able to purchase
Quantity demanded
The claim that, other things being 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 an increase in income leads to an increase in demand
Normal good
A good for which 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 the quantity supplied of a 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
