Microeconomics Market Equilibrium and The Price System

Question 1

Market equilibrium

Answer 1

a situation that occurs in a market when the price is such that the quantity that consumers wish to buy is exactly balanced by the quantity that firms wish to supply

Question 2

Derived demand

Answer 2

demand for a factor of production or good which derives not from the factor or the good itself, but from goods or services that it produces

Question 3

Unemployment

Answer 3

results when people seeking work at the going wage cannot find a job

Question 4

Comparative static analysis

Answer 4

examines the effect on equilibrium of a change in the external conditions affecting a market

Question 5

Elasticity

Answer 5

a measure of the sensitivity of one variable to changes in another variable

Question 6

Price elasticity of demand (PED)

Answer 6

a measure of the sensitivity of quantity demanded to a change in the price of a good or service. It is measured as %changequantitydemanded/%changeprice