price determination in a competitive market

Question 1

demand

Answer 1

the quantity of goods and services desired by customers who have the ability to afford them

Question 2

demand curve

Answer 2

slopes downward from left to right because customers reduce demand as price increases

Question 3

price

Answer 3

the only factor that causes a movement

Question 4

shifts in the demand curve

Answer 4

changes in income, trends, seasonality, world events

Question 5

movements along the demand curve

Answer 5

price

Question 6

price elasticity of demand

Answer 6

responsiveness of demand to a change in price

Question 7

income elasticity of demand

Answer 7

responsiveness of demand to a change in income

Question 8

cross elasticity of demand

Answer 8

responsiveness of demand to a change in the price of another good

Question 9

normal goods

Answer 9

normal goods are products and services that see a rise in demand when incomes rise
has an elasticity of 0-1

Question 10

inferior goods

Answer 10

inferior goods are products and services that see a decrease in demand as incomes rise
have a negative elasticity

Question 11

superior goods

Answer 11

superior goods or luxury goods make up a larger proportion of consumption as income rises
have an elasticity of greater than 1

Question 12

substitute goods

Answer 12

when the demand for one good can replace the demand for another

Question 13

complementary good

Answer 13

when one good is demanded, another good is also demanded at the same time

Question 14

supply

Answer 14

the willingness to produce goods and services based on a profit incentive

Question 15

profit incentive to expand production

Answer 15

suppliers provide more at higher prices so they become more profitable

Question 16

shifts in the supply curve

Answer 16

raw materials, technological advancements, cost of production, economies of scale

Question 17

movement along supply curve

Answer 17

price

Question 18

equilibrium price

Answer 18

when there is a balance in the market as supply equals demand. All products that are available are sold and the market is cleared

Question 19

joint demand

Answer 19

when one good is demanded, another good is also demanded at the same time

Question 20

competitive demand

Answer 20

when the demand for one good can replace the demand for another

Question 21

composite demand

Answer 21

demand for a good that has more than one use

Question 22

derived demand

Answer 22

when the demand for a good or service exists because it is an input into the production of another good or service

Question 23

joint supply

Answer 23

when the production of one good leads to the production of a by product

Question 24

by product

Answer 24

a secondary product that is made as a result of another good being produced