Chapter 4 The Market Forces Of Supply And Demand Flashcards
Quantity demanded
The amount of a good that buyers are willing and able to purchase
Inferior good
A good for which, other things equal an increase in income leads to a decrease in demand.
Market
A group of buyers and sellers of a particular good or service
Law of demand
The claim that, other things, equal the quantity demanded of a good falls when the price of the good rises
Law of supply and demand
Claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good in balance
Competitive market
A market in which there are many buyers of many sellers so that each has a negligible impact on the market price
Demand schedule
A table that shows the relationship between the price of a good and the quantity demanded
Normal good
A good for which, other things equal, an increase in income leads to an increase in demand
Substitutes
Two goods for which an increase in the price of one leads to an increase in demand for the other
Equilibrium price
The price that balances quantity supplied and quantity demanded
Compliments
Two goods for which an increase in the price of one leaves to a decrease in the demand for the other
Equilibrium
Situation in which the price has reached the level where quantity supplied equals quantity demanded
Equilibrium quantity
The quantity supplied and the quantity demanded at the equilibrium price
Surplus
The situation which quantity supplied is greater than quantity demanded
Law of supply
The claim that, other things equal, the quantity supplied of a good rises when the price of a good rises
