microeconomics supply and demand vocab Flashcards
market
any situation where buyers and sellers come into any contact in order to exchange goods and services
demand
the desire to buy a good or service at a given price, backed by the ability to pay for that good or service
utility
a measure of the satisfaction/benefit that we get from purchasing and consuming a good or service
marginal utility
the change in satisfaction/benefit from consuming an extra unit of a good or service
total utility
the total satisfaction/benefit from a given level of consumption of a good or service
supply
the quantity of a good or service that suppliers (producers) wish to sell over a range of prices within a time period (week,month,year)
determinant of demand
factors that affect the demand for a good or service
determinant of supply
the factors that affect the supply of a good or service
equilibrium (market clearing)
a state of balance, or a state of rest where opposing forces are equal and there is therefore no tendency to change, ceteris paribus. in free market this is Qs=Qd
consumer surplus
the difference between price paid and price consumers are willing to pay
producer surplus
the difference between the market price and price charged
subsidy
an amount of money given by the gov to a firm for every unit of output, in order to encourage production
indirect tax
a tax on expenditure
elasticity of demand
the responsiveness of quantity demanded of a product to a change in any of its determinants
cross elasticity of demand XED
the responsiveness of quantity demanded for a product to changes in the price of another product = %changeQd(a) / %changeP(b)
price elasticity of demand PED
the responsiveness of a quantity demanded for a product to a change in its price %changeQd / %changeP
income elasticity of demand YED
the responsiveness of quantity demanded for a product to changes in the price of another product %changeQd / %changeY
elasticity of supply
the responsiveness of a quantity supplies of a product to change any of its determinants
price elasticity of supply PES
the responsiveness of a quantity supplied of a product to a change in its price %changeQs / %changeP
determinants of PED
factors that influence whether the demand for a good or service is elastic or inelastic with regard to a change in the price
incidence of tax
burden of tax - how much of the total tax bill is paid by the consumer (consumer burden) and how much is paid by the firm/producer (producer burden)
ad valorem tax
tax levied as a % of the value of price of the good
wage differentials
the difference in wages between workers with different skills in the same industry or between those with comparable skills in different industries
joint supply
an increase or decrease in the supply of one good leads to an increase or decrease in supply of a by-product
equilibrium price
the price at the equilibrium point
equilibrium quantity
the quantity at the equilibrium point
minimum wage
a wage rate below which employers will not pay
