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Law of Demand
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As the price of a good or service rises (or falls), the quantity of that good or service that people are willing to buy falls (or rises)
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Demand
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The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.
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Quantity Supplied (Qs)
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The amount of a good or service sellers are willing and able to offer at a given price in a given period of time.
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Law of Supply
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As the price of a good or service that producers are willing to offer rises (or falls), the quantity of that good or service supplied rises (or falls).
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Substitutes
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Goods or services that may be used in place of another good or service
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Complements
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Goods and/or services that are often consumed together; e.g., left and right socks, or tennis rackets and tennis lessons
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Marginal Utility
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The extra value or satisfaction that a consumer obtains from consuming one additional unit of output
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Elastic
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Refers to consumers or producers responding significantly to a price change
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Microeconomics
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The study of economics concerned with individual units of the economy such as households, firms and markets
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Factor Market
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The place where productive resources, land, labor and capital, are exchanged for money (wages or salary). Also called a Resource market
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Resource Market
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the place where productive resources, land, labor and capital, are exchanged for money (wages or salary). Also called a Factor Market
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Quantity Demand (Qd)
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The amount of a good or service people will buy at a given price in a given period of time
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Inelastic
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Refers to consumers or producers NOT responding to a price change
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Put Competition
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A market structure with no participants are large enough to have the power to set the price of a product
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Monopolistic Competition
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A market structure in which slightly differentiated products are sold by a large number of relatively small producers, and the barriers to new firms entering the market are low
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Oligopoly
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A market structure in which a few firms account for all or most of the production or sales of a good or service in a particular market, and
where barriers entering the market are very highly
where barriers entering the market are very highly
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Supply
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The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time.
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Market Equilibrium
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The price at which the quantity demanded by buyers equals the quantity supplied by sellers; also called the market-clearing price.
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Surplus
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The situation that results when the quantity supplied of a product exceeds the quantity demanded.
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Shortage
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The situation that results when the quantity demanded for a product exceeds the quantity supplied.
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Monopoly
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A market structure in which there is a single supplier of a good or service
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Sole Proprietorship
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A business owned by one person who receives all the profits and is responsible for all the debts incurred by the business
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Partnership
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A business organization where 2 or more people share ownership of a business
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Corporation
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A legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stock they own
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Nonprice Competition
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Competition by firms trying to attract customers by methods other than reducing prices; examples include advertising and promotional gifts
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Product Differentiation
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The attempt to make your good or service appear better than a substitute in a monopolistic competition
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Liability
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Legal responsibility to pay for damages or losses one has caused
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Price Ceiling
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A legally established maximum price that may be charged for a good or service.
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Cartel
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A type of oligopoly that tries to maintain high price levels or restrict competition
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Collision
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A secret agreement between firms to fix prices or engage in other activities to restrict competition in an industry
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Price Floor
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A legally established minimum price that may be charged for a good or service.
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Price Taker
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A firm that is unable to set a price that differs from the market price without losing profit; a firm in a perfectly competitive industry.
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