Chapter 4 Flashcards
Market
A group of buyers and sellers of a particular good or service
Competitive Market
A market in which there are many buyers and many sellers so that each has a negligible impact on the market price.`
Quantity demanded
The amount of a good that buyers are willing and able to purchase
Law of demand
The claim that other things equal, the quantity demanded of a good falls when the price of the good rises
Demand schedule
A table that shows the relationship between the price of a good and the quantity demanded
Demand curve
A graph of the relationship between the price of a good and the quantity demanded
Factors that shift demand curve
Income
Price of related goods
Tastes
Expectations
Number of buyers
Price of good itself
Represents movement along demand curve
Normal good
a good for which an increase in income leads to an increase in demand
Inferior good
a good for which an increase in income leads to a decrease in demand
Substitutes
Two goods for which an increase in the price of one leads to an increase in the demand for the other
Complements
Two goods for which in increase in the price of one leads to a decrease in the demand for the other
Quantity supplied
The amount of a good that sellers are willing and able to sell
Law of supply
The claim, that all things equal, the quantity supplied of a good rises when the price of the good rises
Supply schedule
A table that shows the relationship between the price of a good and the quantity supplied
