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AP Econ unit 2 p1
| Term | Definition |
|---|---|
| Competitive Market | A market in which there are many buyers and many sellers so that each has a negligible impact on the market price |
| Complements | two goods which an increase in price of one leads to a decrease in the demand for the other |
| Consumer Surplus | * the difference between the price consumers would be willing to pay for a good and the price they actually have to pay |
| Cost | * The expenses involved in making a product |
| Cross-Price Elasticity of Demand | a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good |
| Deadweight Loss | * the decrease in total surplus that results from an inefficient level of production |
| Demand Curve | a graph of the relationship between the price of a good and the quantity demanded |
| Demand Schedule | a table that shows the relationship between the price of a good and the quantity demanded |
| Efficiency | * A market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. |
| Elasticity | a measure of the responsiveness of quantity demanded of quantity supplied to a change in one of its determinants |
| Equality | * (fairness in econ) minimising the disparities in income and wealth among a nation's household. |
| Equilibrium | a situation in which the market price has reached the level at which 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 |
| Income Elasticity of Demand | a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income |
| Inferior Good | a good for which, other things being equal, an increase in income leads to a decrease in demand |
| Law of Demand | the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises |
| Law of supply | the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises |
| Law of Supply and Demand | the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded of that good into balance |
Created by:
shelby.miller.
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