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Market
group of buyers and sellers of a particular good or service
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Competitive Market
market in which there are many buyers and sellers so that each has a negligible impact on the market price
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Quantity Demanded
amount of good buyers are willing and able to purchase
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Law of Demand
other things equal, the quantity demanded of a good falls when the price of the good rises
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Demand Schedule
table that shows the relationship between the price of a good and the quantity demanded
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Demand Curve
graph of relationship between price of a good and the quantity demanded
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Normal Good
good for which other things equal, an increase in income leads to an increase in demand
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Inferior Good
good for which other things equal, an increase in income leads to a decrease in demand
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Substitutes
two good which an increase in price of one leads to increase in demand for other
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Complements
two goods for which an increase in price of one leads to decrease in demand for other
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Quantity Supplied
amount of good that sellers are willing and able to sell
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Law of Supply
other things equal, the quantity supplied of a good rises when price of good rises
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Supply Schedule
table that shows relationship between price of a good and quantity supplied
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Supply Curve
graph of relationship between price of good and quantity supplied
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Equilibrium
situation in which market price has reached level at which quantity supplied equals quantity demanded
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Equilibrium Price
price that balances quantity supplied and quantity demanded
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Equilibrium Quantity
the quantity supplied and quantity demanded at equilibrium price
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Surplus
quantity supplied is greater that quantity demanded
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Shortage
quantity demanded is greater than quantity supplied
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Law of Supply and Demand
claim that price of any good adjusts to bring quantity supplied and quantity demanded for that good into balance
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