Chapter 3 Flashcards

0
Q

Demand

A

A schedule showing how much of a good or service people will purchase at any price during a specified time period, other things being constant.

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1
Q

Market

A

All of the arrangements that individuals have for exchanging with one another. Thus, for example, we can speak of the labor market, the automobile market, and the credit market.

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2
Q

Law of demand

A

The observation that there is a negative, or inverse, relationship between the price of any good or service and the quantity demanded, holding other factors constant.

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3
Q

Relative price

A

The money price of one commodity divided by the money price of another commodity; the number of units of one commodity that must be sacrificed to purchase one unit of another commodity.

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4
Q

Money price

A

The price expressed in today’s dollars; also called the absolute or nominal price.

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5
Q

Demand curve

A

A graphical representation of the demand schedule. It is a negatively sloped line showing the inverse relationship between the price and the quantity demanded (other things being equal).

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6
Q

Market demand

A

The demand of all consumers in the marketplace for a particular good or service. The summation of each price of the quantity demanded by each individual.

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7
Q

Ceteris paribus condition

A

Determinants of the relationship between price and quantity that are unchanged along the curve. Changes in these factors cause the curve to shift.

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8
Q

Normal goods

A

Goods for which demands rises as income rises. Most goods are normal goods.

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9
Q

Inferior goods

A

Goods for which demand falls as income rises.

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10
Q

Substitutes

A

Two goods are substitutes when a change in the price of one causes a shift in demand for the other in the same direction as the price change.

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11
Q

Supply

A

A schedule showing the relationship between price and quantity supplied for a specified period of time, other thinks being equal.

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12
Q

Law of supply

A

The observation that the higher the price of a good, the more of that good the sellers will make available over a specified time period, other things being equal.

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13
Q

Supply curve

A

The graphical representation of the supply schedule;a line(curve) showing the supply schedule, which generally slopes upward (has a positive slope) , other things being equal.

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14
Q

Subsidy

A

A negative tax; a payment to a producer from the government, usually in the form of a cash grant per unit.

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15
Q

Market clearing, or

Equilibrium, price

A

The price that clears the market, at which quantity demanded equals quantity supplied; the price where the demand curve intersects the supply curve.

16
Q

Equilibrium

A

The situation when quantity supplied equals quantity demanded at a particular price.

17
Q

Shortage

A

A situation in which a quantity demanded is greater than quantity supplied at a price below the market clearing price.

18
Q

Surplus

A

A situation in which quantity supplied is greater than quantity demanded at a price above the market clearing price.