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equilibrium
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the point at which there is no tendency for change. quantity supply = quantity demand
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equilibrium price
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the price at which the market is in equilibrium
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equilibrium quantity
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the quantity demanded and supplied in equilibrium
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market
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a setting bringing together potential buyers and sellers
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market economies
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each individual makes their own production and consumption decisions, buying and selling in markets
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planned economies
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centralized decisions are made about what is produced, how, by whom, and who gets what
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shortage
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when quantity demand exceeds the quantity supplied
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surplus
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when the quantity demanded is less than the quantity supplied
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cross-price elasticity of demand
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how responsive the demand of one good is to the change in price of another (percent change of quantity demanded/percent change in price of another good)
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elastic
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when the absolute value of the percent change in quantity is larger than the absolute value of the percent change in price (absolute value of the price elasticity is greater than 1)
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income elasticity of demand
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a measure of how responsive the demand for a good is to changes in income. (percent change in quantity demanded/percent change in income)
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inelastic
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when the absolute value of percent change in quantity is smaller than absolute value of the percent change in price (absolute value of price elasticity is less than 1)
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perfectly inelastic
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when any change in price leads to an indefinitely large change in quantity
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price elasticity of demand
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a measure of how responsive buyers are to price changes. (percentage change in quantity demanded/percent change in price)
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price elasticity of supply
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a measure of how responsive sellers are to price changes (percent change in quantity supplied/percent change in price)
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total revenue
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the total amount you receive from buyers, which is calculated as price * quantity
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binding price ceiling
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a price ceiling that prevents the market from reaching the market equilibrium price, meaning that the highest price sellers can charge is set below the equilibrium price
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binding price floor
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a price floor that prevents the market from reaching the equilibrium price, meaning that the lowest price that sellers can charge is above the equilibrium price
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economic burden
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the burden created by the change in after-tax prices faced by buyers and sellers
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mandate
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a requirement to buy or sell a minimum amount of a good
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price ceiling
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a maximum price that sellers can charge
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price floor
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a minimum price that sellers can change
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quantity regulation
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a minimum or maximum quantity that can be sold
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quotas
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a limit on the maximum quantity of a good that can be. sold
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statutory burden
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the burden of being assigned by the government to send a tax payment
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subsidy
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a payment made by the government to those who make a specific choice
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tax incidence
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the division of the economic burden of a tax between buyers and sellers
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