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Econ 101
Chapter 4
| Question | Answer | Question | Answer |
|---|---|---|---|
| Quantity Demanded | The amount of a good that buyers are willing and able to purchase. | Complements | Two goods for which an incrase in the price of one leads to a decrease in the demand for the other. EX: Gas and cars; Peanut Butter and Jelly. |
| Law of Demand | The claim that, other things equal, the quantity demanded of a good falls when the price of the good rises. | Quantity Supplied | amount of a good that sellers are willing and able to sell |
| Demand Schedule | a table that shows the relationship between the price of the good and the quantity demanded | law of supply | the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises |
| Demand Curve | A graph of the relationship between the price of a good and the quantity demanded. | supply schedule | table that shows the relationship btw the price of a good and the quantity supplied |
| Normal Good | A good for which, other things equal, an incrase in income leads to an increase in demand. | supply curve | a graph of the relationship between the price of a good and the quantity supplied |
| Equilibrium | a situation in which the market price has reached the level at which qunatity 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 |
| Market | A group of buyers and sellers of a particular good or service. | Inferior Good | A good for which, other things equal, an increase in income leads to a decrease in demand. EX: As your income falls, you are less likely to buy a car or cab, and instead take the bus. |
| Competitive Market | A market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Ex: IceCream Sales. | Substitues | Two goods for which an increase in the price of one leads to an increase in the demand for the other EX:Frozen yogurt and ice cream. |
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aborrill
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