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Definition: A relation between the price of a good and the quantity that consumers are willing and able to buy per period, other things constant.
Demand
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Definition: The quantity of a good that consumers are willing and able to buy per period relates inversely, or negatively, to the price, other things constant.
Law of Demand
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Definition: When the price of a good falls, that good becomes cheaper compared to other goods so consumers tend to substitute that good for other goods.
Substitution Effect of a Price Change
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Definition: The number of dollars a person receives per period, such as $400 per week.
Money Income
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Definition: Income measured in terms of the goods and services it can buy; real income changes when the price changes.
Real Income
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Definition: A fall in the price of a good increases consumers' real income; making consumers more able to purchase goods; for a normal good, the quantity demanded increases.
Income Effect of a Price Change
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Definition: A curve showing the relation between the price of a good and the quantity consumers are willing and able to buy per period, other things constant.
Demand Curve
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Definition: The amount of a good consumers are willing and able to buy per period at a particular price, as reflected by a point on a demand curve.
Quantity Demanded
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Definition: A relation between the price of a good and the quantity purchased by an individual consumer per period, other things constant.
Individual Demand
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Definition: The relation between the price of a good and the quantity purchased by all consumers in the market during a given period, other things constant; sum of the individual demands in the market.
Market Demand
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Definition: A good, such as new clothes, for which demand increases, or shifts rightward, as consumer income rises.
Normal Good
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Definition: A good , such as used clothes, for which demand decreases, or shifts leftward, as consumer income rises.
Inferior Good
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Definition: Goods, such as Coke and Pepsi, that relate in such a way that an increase in the price of one shifts the demand for the other rightward.
Substitutes
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Definition: Goods, such as milk and cookies, that relate in such a way that an increase in the price of one shifts the demand for the other.
Complements
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Definition: Consumer preferences; likes and dislikes in consumption assumed to remain constant along a given demand curve.
Tastes
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Definition: Change in quantity demanded resulting from a change in the price of the good, other things constant.
Movement Along a Demand Curve
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Definition: Movement of a demand curve right or left resulting from a change in one of the determinants of demand other than the price of the good.
Shift of a Demand Curve
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Definition: A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant.
Supply
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Definition: The amount of a good that producers are willing and able to sell per period is usually directly related to its price, other things constant.
Law of Supply
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Definition: A curve showing the relation between price of a good and the quantity producers are willing and able to sell per period, other things constant.
Supply Curve
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Definition: The amount offered for sale per period at a particular price, as reflected by a point on a given supply curve.
Quantity Supplied
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Definition: The relation between the price of a good and the quantity an individual producer is willing and able to sell per period, other things constant.
Individual Supply
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Definition: The relation between the price of a good and the quantity all producers are willing and able to sell per period, other things constant.
Market Supply
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Definition: Resources used to produce the good in question.
Relevant Resources
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Definition: Other goods that use some or all of the same resources as the good in question.
Alternative Goods
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Definition: Change in quantity supplied resulting from a change in the price of the good, other things constant.
Movement Along a Supply Curve
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Definition: Movement of a supply curve left or right resulting from a change in one of the determinants of supply other than the price of the good.
Shift of a Supply Curve
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Definition: The costs of time and information required to carry out market exchange.
Transaction Costs
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Definition: At a given price, the amount by which quantity supplied exceeds quantity demanded; usually forces the price down.
Surplus
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Definition: At a given price, the amount by which quantity demanded exceeds quantity supplied; usually forces the price up.
Shortage
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Definition: The condition that exists in a market when the plans of buyers match those of sellers, so quantity demanded equals quantity supplied and the market clears.
Equilibrium
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Definition: The condition that exists in a market when the plans of buyers do not match those of sellers; a temporary mismatch between quantity supplied and quantity demanded as the market seeks equilibrium.
Disequilibrium
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Definition: A minimum legal price below which a product cannot be sold; to have an impact, must be set above the equilibrium price.
Price Floor
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Definition: A maximum legal price above which a product cannot be sold; to have an impact, must be set below the equilibrium price.
Price Ceiling
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