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2nd Test
Definitions
| Question | Answer |
|---|---|
| Ceteris Paribus | The requirement that when analyzing the relationship between two variables - such as price and quantity demanded - other variables must be held constant. |
| Law of Demand | The rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease. |
| Law of Supply | The rule that, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied. |
| Competitive Market Equilibrium | Has a market equilibrium with many buyers and sellers. Only at this point is the quantity demanded equal to the quantity supplied. |
| Complements | Goods and services that are used together. |
| Demand Curve | A curve that shows the relationship between the price of a product and the quantity of the product demanded. |
| Demand Schedule | A table that shows the relationship between the price of a product and the quantity of the product demanded. |
| Demographics | The characteristics of a population with respect to age, race, and gender. |
| Income Affect | The change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power. |
| Inferior Good | A good for which the demand increases as income falls and decreases as income rises. |
| Market Demand | The demand by all the consumers of a given good or service. |
| Market Equilibrium | Occurs where the demand curve intersects the supply curve. |
| Normal Good | A good for which the demand increases as income rises and decreases as income falls. |
| Perfectly Competitive Market | A market that meets the conditions of (1) many buyers and sellers (2) all firms selling identical products, and (3) no barriers to new firms entering the market. |
| Quantity Demanded | The amount of a good or service that a consumer is willing and able to purchase at a given price. |
| Quantity Supplied | The amount of a good or service that a firm is willing and able to supply at a given price. |
| Shortage | A situation in which the quantity demanded is greater than the quantity supplied. |
| Substitutes | Goods and services that can be used for the same purpose. |
| Substitution Affect | The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes. |
| Supply Curve | A curve that shows the relationship between the price of a product and the quantity of the product supplied. |
| Surplus | A situation in which the quantity supplied is greater than the quantity demanded. |
| Technological Change | A positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs. |
| 20 MCP |
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