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VOCAB Chapter 4
The Market Forces of Supply and Demand
| Term | Definition |
|---|---|
| Market | A group of buyers and sellers of a particular good or service. |
| Competitive market | A market in which there are many buyers and sellers so that each has a negligible impact on the market price. |
| Monopoly | Market with only one seller. |
| 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 a 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. |
| Normal Good | A good for which, other things equal, an increase in income leads to an increase in demand. |
| Inferior good | A good for which, other things equal, 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 an 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 and willing and able to sell. |
| Law of supply | The claim that, other things equal, the quantity supplied of a good rises when the price of a good rises. |
| Supply schedule | A table that shows the relationship between the price of a good and the quantity supplied. |
| Supply curve | A graph of the relationship between the price of a good and the quantity supplied. |
| Equilibrium | A situation in which the price has reached the level where quantity supplied equals quantity demanded. |
| Equilibrium price | The price that balances quantity supplied and quantity demanded. |
| Equilibrium quantity | The quantity supplied and the quantity demanded at the equilibrium price. |
| Surplus | A situation in which quantity supplied is greater than quantity demanded. |
| Shortage | A situation in which quantity demanded is greater than quantity supplied. |
| Law of Supply and Demand | The claim that the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance. |
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jessjeanarnold
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