MarketSystemIGCSE Flashcards
Exporters
Firms that sell overseas
Price
The amount of money that goods or services are exchanged for in a transaction
Market
A set of arrangements allowing buyers and sellers to communicate and exchange goods and services
Demand
the quantity of a good or service individuals are willing to purchase at various prices and it Depends on individuals’ needs and wants as well as their income
Price Mechanism
The system in a market economy whereby changes in price in response to changes in demand and supply have the effect of making demand equal to supply.
Demand Curve
A graph of the relationship between the price of a good and the quantity demanded.
Effective Demand
Demand supported by the ability to pay for a good or service
Inverse Relationship
The relationship between two variables that change in opposite directions for example: product price and quantity demanded.
Complementary Goods
Products and services that are used together. When the price of one falls the demand for the other increases (and conversely).
Inferior Goods
Goods for which demand tends to fall when ‘income’ rises.
Normal Goods
Goods for which demand goes up when income is higher and for which demand goes down when income is lower.
Substitute Goods
goods that can be used to replace the purchase of similar goods when prices rise
Shift in the demand curve
a movement to the left or tight of the entire demand curve when there is a change in any factor affecting demand except the price
Supply Curve
A graph illustrating how much of a product a firm will sell at different prices.
Advalorem Tax
A tax levied as a percentage of the price of a good
Indirect Taxes
Taxes imposed by the government on spending
Subsidy
A government payment that supports a business or market
Equilibrium Price
the price that balances quantity supplied and quantity demanded
Excess Demand
when quantity demanded is more than quantity supplied
Excess Supply
when quantity supplied is more than quantity demanded
Market Clearing Price
Price where the amount supplied in a market matches exactly the amount demanded.
Total Revenue
Price x Quantity; the total amount of money a firm receives by selling goods or services
Elastic Demand
A situation in which consumer demand is sensitive to changes in price.
Inelastic Demand
A situation in which an increase or a decrease in price will not significantly affect demand for the product.