Price Determination In A Competitive Market

Question 1

Market

Answer 1

A situation in which buyers and sellers come together to engage in trade.

Question 2

Competitive market

Answer 2

A situation where there is a large number of potential buyers and sellers with abundant information about the market.

Question 3

Equilibrium price

Answer 3

The price at which the planned demand of consumers equals he planned supply of firms.

Question 4

Demand

Answer 4

The quantity of a good or service that consumers are willing and able to buy at given prices in a particular time period.

Question 5

Effective demand

Answer 5

Consumers desire to buy a good, backed up by the ability to pay.

Question 6

Conditions of demand

Answer 6

Factors other than the price of he good that lead to a change in position of the demand curve.

Question 7

Taxation

Answer 7

A change placed by the government on various forms of economic activity. Most taxes are on forms of income and types of spending.

Question 8

Substitute

Answer 8

A good that may be consumed as an alternative to another good.

Question 9

Complement

Answer 9

A good that tends to be consumed together with another good.

Question 10

Price elasticity of demand

Answer 10

The responsiveness of quantity demanded of a good to a change in price.

Question 11

Income elasticity of demand

Answer 11

The responsiveness of demand for a good to a change in consumers’ real income.

Question 12

Cross elasticity of demand

Answer 12

The responsiveness of the demand for a product following a change in price of another product.

Question 13

Supply

Answer 13

The quantity of a good or service that firms plan to sell at given prices in a particular time period.