3: Definitions Flashcards
(34 cards)
Competing supply
When resources can be used to produce one goods or another good, not both.
Competitive market
A market with large number of buyers and sellers, with low barriers to entry an exit.
Complimentary goods
Goods in joint demand; these goods are often brought together, e.g. printers and ink cartridges
Composite demand
Demand for multi-purpose goods.
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 the supply other than a goods price, that sets the position of the goods supply curve.
Customer sovereignty
Consumers can collectively govern production in a market via exercising spending power. The strongest imperfectly competitive markets.
Cross elasticity of demand (XED)
Measures the responsiveness of a good demand to a change in the price of different good.
Demand
The quantity of a good or service that consumer is willing enabled by at a given price, at a given time.
Derived demand
Demand for a good that is the input of another good.
Disequilibrium
Excessive supply or demand 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 opposing forces.
Equilibrium price
The price where planned demand matches planned supply.
Excess demand
When consumers want to buy more than the producers are willing to sell. Occurs below equilibrium price.
Excess supply
When producers want to sell more than the 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 good demand to a change in the incomes of consumers.
Inferior goods
A good 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 income rises.
Price elasticity of supply
Measures the responsiveness of a good supply to a change in price.
Producer sovereignty
Producers determine what is produced and the price is charged.
