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AP Econ unit 2 pt 2
| Term | Definition |
|---|---|
| Market | A group of buyers and sellers of a particular good or service |
| Normal Good | a good for which, other things being equal, an increase in income leads to an increase in demand |
| Price ceiling | a legal maximum on the price at which a good can be sold |
| price elasticity of demand | a measure of how much the quantity demanded of a good responds to a change in the price of that good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price |
| price elasticity of supply | a measure of how much the quantity supplied of a good responds to a change in the prive of that good, computed as the percentage change in quantity supplied divided by the percentage change in price |
| price floors | a legal minimum on the price at which a good can be sold |
| producer surplus | the amount a seller is paid for a good minus the seller's cost of providing it |
| Quantity Demanded | the amount of a good that buyers are willing and able to purchase |
| Quantity supplied | the amount of a good that sellers are willing and able to sell |
| shortage | a situation in which quantity demanded is greater than quantity supplied |
| substitutes | two goods for which an increase in the price of one leads to an increase in the demand for the other |
| supply curve | a graph of the relationship between the price of a good and the quantity supplied |
| supply schedule | a table that shows the relationship between the price of a good and the quantity supplied |
| surplus | a situation in which quantity supplied is greater than the quantity demanded |
| tariff | a tax on goods produced abroad and sold domestically |
| tax incidence | the manner in which the burden of a tax is shared among participants in the market |
| total revenue | the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold |
| Willingness to pay | the maximum amount that a buyer will pay for a good |
Created by:
shelby.miller.
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