Price determination in a competitive market

Question 1

Competing supply

Answer 1

when resources can be used to produce one good or another good but not both

Question 2

Competitive markets

Answer 2

A market with large numbers of buyers and sellers with low barriers of entry and exit

Question 3

Complementary goods

Answer 3

Goods in joint demand that are often bought together

Question 4

Composite demand

Answer 4

Demand for a multi purpose good

Question 5

Condition of demand

Answer 5

A determinant of demand other than the goods price that sets the position of the goods demand curve

Question 6

Condition of supply

Answer 6

A determinant of supply other than the good’s price, that sets the position of the good’s supply curve.

Question 7

Customer sovereignty

Answer 7

Consumers can collectively govern production in a market via exercising spending power. Strongest in perfectly competitive markets.

Question 8

Cross elasticity of demand

Answer 8

Measures the responsiveness of a good’s demand to a change in the price of a different good.

Question 9

Demand

Answer 9

The quantity of a good or service that a consumer is willing and able to pay for at a price at a given time

Question 10

Derived demand

Answer 10

Demand for a good that is the input of another good

Question 11

Disequilibrium

Answer 11

Excess supply or demand in a market

Question 12

Elasticity

Answer 12

The proportionate responsiveness of a second variable to a change in a first variable

Question 13

Equilibrium

Answer 13

No excess supply or demand; a state of balance

Question 14

Equilibrium price

Answer 14

the price where planned demand meets planned supply

Question 15

Excess demand

Answer 15

When consumers want to buy more than producers are willing to sell; occurs below equilibrium price.

Question 16

Excess supply

Answer 16

When producers want to sell more than consumers are willing to buy; occurs above equilibrium price.

Question 17

Exchange

Answer 17

Trading objects of value, utilising a medium of exchange

Question 18

Income elasticity of demand

Answer 18

Measures the responsiveness of a good’s demand to a change in the incomes of consumers.

Question 19

Inferior good

Answer 19

A good for which demand rises as income falls

Question 20

Joint supply

Answer 20

When one good is produced, another good is also produced from the same raw materials

Question 21

Normal good

Answer 21

A good for which demand rises as incomes rise

Question 22

Price elastic to of supply

Answer 22

Measures the responsiveness of a good’s supply to a change in price

Question 23

Producer sovereignty

Answer 23

Producers determine what is produced and the prices charged

Question 24

Substitute good

Answer 24

a good in competing demand and can be used in the place of a other similar good

Question 25

Supply

Answer 25

The quantity of a good or service that a producer is willing and able to sell at a given price, at a given time