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Micro - Ch. 3
Microeconomics - Ch 3 - Demand and Supply
| Term | Definition |
|---|---|
| ceteris paribus | other things being equal |
| complements | goods that are often used together so that consumption of one good tends to enhance consumption of the other |
| consumer surplus | the extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid |
| deadweight loss | the loss in social surplus that occurs when a market produces in inefficient quantity |
| demand | the relationship between price and the quantity demanded of a certain good or service |
| demand curve | a graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on the HORIZONTAL axis and price on the VERTICAL axis |
| demand schedule | a table that shows a range of prices for a certain good or service and the quantity demanded at each price |
| economic or social surplus | the sum of consumer surplus and producer surplus |
| equilibrium | the situation when quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change |
| equilibrium price | the price where quantity demanded is equal to quantity supplied |
| equilibrium quantity | the quantity at which quantity demanded and quantity supplied are equal for a certain price level |
| excess demand | at the existing price, the quantity DEMANDED exceeds the quantity SUPPLIED; also called a shortage |
| excess supply | at the existing price, quantity SUPPLIED exceeds the quantity DEMANDED; also called a surplus |
| factors of production or imputs | the combination of labor, materials, and machinery that is used to produce goods and services; also called inputs |
| inferior good | a good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls |
| law of demand | the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant |
| law of supply | the common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied, while all the variables are held constant |
| normal good | a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls |
| price | what a buyer pays for a unit of the specific good or service |
| price ceiling | a legal maximum price |
| price control | government laws to regulate prices instead of letting market forces determine prices |
| price floor | a legal minimum price |
| producer surplus | the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept |
| quantity demanded | the total number of units of a good or service consumers are willing to purchase at a given price |
| quantity supplied | the total number of units of a good or service producers are willing to sell at a given price |
| shift in demand | when a change in some economic factor (other than price) causes a different quantity to be demanded at every price |
| shift in supply | when a change in some economic factor (other than price) causes a different quantity to be supplied at every price |
| substitute | a good that can replace another to some extent, so that greater consumption of one good can mean less of the other |
| supply | the relationship between price and the quantity supplied of a certain good or service |
| supply curve | a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the HORIZONTAL axis and price of the VERTICAL axis |
| supply schedule | a table that shows a range of prices for a good or service at the quantity supplied at each price |
Created by:
Kendall Posey
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