Unit 4 Quiz Terms Flashcards
law of demand
consumers will buy more of a good when its price is lower and less when its price is higher
substitution effect
when consumers react to an increase in a good’s price by consuming less of that good and more of a substitute good
income effect
the change in consumption that results when a price increase causes real income to decline
market demand schedule
a table that lists the quantity of a good all consumers in a market will buy at various prices
demand curve
a graphic representation of a demand schedule
ceteris paribus
a Latin phrase that means “all things held under constraint”
demographics
the statistical characteristics of populations and population segments, especially when used to identify consumer markets
complements
two goods that are bought and used together
substitutes
goods that are used in place of one another
inelastic
describes demand that is not very sensitive to price changes
elastic
describes demand that is very sensitive to a change in price
total revenue
the total amount of money a company receives by selling goods or services
market supply schedule
a chart that lists how much of a good all suppliers will offer at different prices
market supply curve
a graph of the quantity supplied of a good by all suppliers at different prices
equilibrium
When a market is at equilibrium, both buyers and sellers benefit.
shortage
causes prices to rise as the demand for a good is greater than the supply of that good
surplus
causes a drop in prices as the supply for a good is greater than the demand for that good.
price ceiling
While markets tend toward equilibrium on their own, sometimes the government intervenes and sets market prices.
price floor
a (minimum price set by the government).
minimum wage
Minimum wage affects the demand and the supply of workers.
