Chapter 3 Vocab

Question 1

Ceteris paribus

Answer 1

Other things being equal

Question 2

Complements

Answer 2

Goods that are often used together so that consumption of the one good tends to enhance the consumption of the other

Question 3

Consumer surplus

Answer 3

The extra benefit consumers received from buying a good/service; measured by what the individuals would have been willing to pay minus the amount actually paid

Question 4

Deadweight loss

Answer 4

The loss in social surplus that occurs when a market produces inefficient quantity

Question 5

Demand

Answer 5

Relationship between price and the quantity demanded of a good/service

Question 6

Demand curve

Answer 6

(Top to bottom) A graphic representation of the relationship between price and quantity demanded of a good/service with quantity as the horizontal axis in price is vertical axis

Question 7

Demand schedule

Answer 7

A table that shows a range of prices for a certain good or service and quantity demanded at each price

Question 8

Equilibrium

Answer 8

The situation where quantity demanded is equal to quantity supplied; combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change

Question 9

Equilibrium price

Answer 9

Price where quantity demanded is equal to quantity supplied

Question 10

Equilibrium quantity

Answer 10

Quantity at which quantity demanded and quantity supplied is equal at a certain price level

Question 11

Excess demand/shortage

Answer 11

At existing price, quantity demanded exceeds quantity supplied

Question 12

Price ceiling

Answer 12

Legal maximum price

Question 13

Price floor

Answer 13

Legal minimum price

Question 14

Excess supply/surplus

Answer 14

At existing price, quantity supplied exceeds quantity demanded

Question 15

Factors of production/ imputs

Answer 15

Resources such as labors, materials, machinery that are used to produce goods/services

Question 16

Inferior good

Answer 16

A good in which quantity demand falls as income rises and quantity demanded rises when income falls

Question 17

Law of demand

Answer 17

Common relationship where the higher the price the lower quantity demand of a good/service. Lower price leads to higher demand

Question 18

Law of supply

Answer 18

Common relationship that the higher the price the greater quantity supplied. The lower the price leads to less quantity supplied

Question 19

Normal good

Answer 19

Good in which quantity demanded rises as income rises and falls as income falls

Question 20

Price

Answer 20

What buyer pays for a unit of a good/service

Question 21

Price control

Answer 21

Government laws to regulate prices instead of market prices determining prices

Question 22

Producer surplus

Answer 22

Extra benefit producers receive from selling a good/service (measured by the price the producers actually received minus the price the producer would have been willing to accept)

Question 23

Quantity demanded

Answer 23

Total number of units of a good/service consumers are willing to purchase at a price

Question 24

Quantity supplied

Answer 24

Total number of units of a good/service producers are willing to sell at a given price

Question 25

Shift in demand

Answer 25

When a change in some economic (other than price) event causes a different quantity to be demanded at every price

Question 26

Shift in supply

Answer 26

When a change in some economic (other than price) event causes a different quantity to be supplied at every price

Question 27

Social surplus/economic surplus/ total surplus

Answer 27

The sum of consumer surplus and producer surplus

Question 28

Substitute

Answer 28

A good that can replace another to some extent, so that greater consumption of one good can mean less of the other

Question 29

Supply

Answer 29

The relationship between price and the quantity supplied of a good/service

Question 30

Supply curve

Answer 30

(Bottom to top) A line that shows the relationship between price and quantity supplied on a graph with quantity supplied on the horizontal axis and price on the vertical access

Question 31

Supply schedule

Answer 31

A table that shows a range of prices for a good or service and the quantity supply to each price