price determination in a competitive market Flashcards
competing supply
when resources can be used to produce one good OR another good, not both
competitive market
a market with large numbers of buyers and sellers, with low barriers to entry and exit.
complementary goods
goods in joint demand; they’re often bought together, e.g., printers and ink cartridges.
composite demand
demand for a multipurpose 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
consumer 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 another good.
demand
the quantity of a good or service that a consumer is willing and able to buy at a a given price, at a given time.
derived demand
demand for a good that is the input of another good.
disequilibrium
excess demand or supply 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 two 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 equilibrium price.
excess supply
when producers want to sell more than consumers are willing to buy; occurs above 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 a change in the incomes of consumers
inferior good
a good for which demand rises as income falls
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.
substitute good
a good in competing demand; a good that can be used in place of another similar good.
Supply
the quantity of a good or service that a producer is wiling and able to sell at a give price, at a given time.
