Definitions-Topic 3:Price Determination in a competitive Market Flashcards
Competing supply
When resources can be used to produce one good or another good not both
Competitive markets
A market with large numbers of buyers and sellers with low barriers to entry and exit
Complementary goods
Goods in joint demand ;these goods are often bought together e.g. phones and phone chargers
Composite demand
Demand for a multi- purpose good
Condition of demand
A determinant of demand other than the goods price , that sets the position of the goods demand curve
Condition of supply
A determinant of supply other than the goods price , that sets the position of the goods supply curve
Customer sovereignty
Consumers can collectively govern production in a market via exercising spending power . Strongest in perfectly competitive markets
Cross elasticity of demand(XED)
Measures the responsiveness of a goods demand to a change in price of a different good
Demand
The quantity of a good or service that a consumer is willing and able to buy at a given price, at a given time
Derived demand
Demand for a good that is the input of another good
Disequilibrium
Excess supply or demand in a market
Effective demand
Desire for a good or service that is backed by the ability to pay for said good or service
Elasticity
The proportionate responsiveness of a second variable to a change in a first variable
Equilibrium
No excess supply or demand in a market ; a state of balance between opposing forces
Equilibrium price
The price where planned demand matches planned supply
Excess demand
When consumers want to buy more than producers are willing to sell;occurs below the equilibrium price
Excess supply
When producers want to sell more than consumers are willing to buy ; occurs above the equilibrium price
Exchange
Trading objects of value , utilising media of exchange e.g. money
Income elasticity of demand (YED)
Measures the responsiveness of a goods demand to changes in the incomes of consumers
Inferior good
A good for which demand rises as incomes fall
Joint supply
When one good is produced , another good is also produced from the same raw materials
Normal good
A good for which demand rises as incomes rise
Price elasticity of supply
Measures the responsiveness of a goods supply to a change in price
Producer sovereignty
Producers determine what is produced and the prices charged
