Krugman Textbook Chapter 3 Flashcards
Competitive Market
A market where there are many buyers and sellers of the same good or service, and none of them can influence the price at which a good or service is sold.
Supply
A good or service produced by a producer, often in exchange for another good or service.
Demand
A good or service demanded by a consumer, often in exchange for another good or service.
Demand Schedule
A list or table showing how much of a good or service consumers will buy at different prices.
Quantity Demanded
The actual amount of a good or service consumers are willing to buy at some specific price.
Demand Curve
A graphical representation of the demand schedule, showing the relationship between quantity demanded and price.
Law of Demand
The principle that a higher price for a good or service, other things equal, leads people to demand a smaller quantity of that good or service.
Shift of the Demand Curve
A change in the quantity demanded at any given price, represented graphically by the change of the original demand curve to a new position, denoted by a new demand curve.
Movement along the Demand Curve
A change in the quantity demanded of a good that results from a change in the price of that good.
Substitutes
Pairs of goods for which a rise in the price of one of goods leads to an increase in the demand for the other good.
Complements
Pairs of goods for which the rise in the price of one good leads to a decrease in demand for the other good.
Normal Good
A good where a rise in income increases the demand for that good - the normal case.
Inferior Good
A good where a rise in income decreases the demand for that good.
Individual Demand Curve
A graphical representation of the relationship between quantity demanded and price for an individual consumer.
Quantity Supplied
The actual amount of a good or service producers are willing to sell at some specific price.
Supply Schedule
A list or table showing how much of a good or service producers will supply at different prices.
Supply Curve
A graphical representation of the supply curve, showing the relationship between quantity supplied and price.
Shift of the Supply Curve
A change in the quantity supplied of a good or service at any given price, represented graphically by the change of the original supply curve to a new position, denoted by a new supply curve.
Movement along the Supply Curve
A change in the quantity supplied of a good that results from a change in the price of that good.
Input
A good or service used to produce another good or service.
Individual Supply Curve
A graphical representation of the relationship between quantity supplied and price for an individual producer.
Equilibrium Price
The price where the market is in equilibrium, or where the good or service demanded equals the quantity of that good or service.
Equilibrium Quantity
The quantity of a good or service bought and sold at the equilibrium price.
Market-Clearing Price
The price at which the market is in equilibrium, or when the quantity of a good or service demanded equals the quantity of that good or service supplied.
Surplus
The excess of a good or service that occurs when the quantity supplied exceeds the quantity demanded. Occur when the price is above the equilibrium price.
Shortage
The insufficiency of a good or service that occurs when the quantity demanded exceeds the quantity supplied. Occurs when the price is below the equilibrium price.
