price determination in a competitive market-demand Flashcards
market
A place where buyers and sellers meet to exchange a transaction or to determine a price of a good or service
demand
quantity of goods and services that consumers are willing and able to buys at a given price over a given period of time
law of demand
as price of a good or service falls the quantity demanded increases. There’s an inverse relationship between price and quantity demanded of a good or service.
equilibrium price
demand = supply
what is a movement?
caused by a change in price but the assumption (ceteris paribus) is all other factor stays the same.
extension of demand
an increase in the quantity demanded resulting from a fall in price
contraction of demand
fall in quantity resulting from an increase in price
shifts of a demand curve
change in income
price of substitute goods
changes in population
changes in fashion
changes in legislation
advertising
complementary goods
goods that are demanded at the same time.
an increase in the price of one product will reduce the demand of its complement.
substitute good
goods that are in competing demand
normal good
demand increases as income rises
inferior good
good for which demand decrease as income rises
composite demand
demand for a good which has more than one use
derived demand
a good that occurs when a good is necessary for the production of another good
consumer surplus
difference between how much buyers are willing to pay for the good and what they actually pay.
