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demand
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how much you are willing and able to buy
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law of demand
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consumers will buy more of a good when its price is lower and less when its price is higher
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income effect
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the change in consumption that results when a price increase causes real income to decline
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demand schedule
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a table that lists the quantity of a good a person will buy at various prices in a market
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market demand schedule
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a table that lists the quantity of a good all consumers in a market will buy at various prices
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demand curve
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a graphic representation of a demand schedule
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normal good
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a good that consumers demand more of when their incomes increase
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inferior good
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a good that consumers demand less of when their incomes increase
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complements
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two goods that are bought and used together
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substitutes
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goods that are used in place of one another
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supply
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the amount of goods available
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law of supply
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tendency of suppliers to offer more of a good at a higher price
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supply schedule
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a chart that lists how much of a good a supplier will offer at different prices
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supply curve
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a graph of the quantity supplied of a good at different prices
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market supply curve
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a graph of the quantity supplied of a good by all suppliers at different prices
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marginal cost
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the cost of producing one more unit of a good
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marginal revenue
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the additional income from selling one more unit of a good; sometimes equal to price
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subsidy
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a government payment that supports a business or market
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regulation
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government intervention in a market that affects the production of a good
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market supply schedule
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a chart that lists how much of a good all suppliers will offer at different prices
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equilibrium
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the point at which the demand for a product or service is equal to the supply of that product or service
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disequilibrium
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describes any price or quantity not at equilibrium; when quantity supplied is not equal to quantity demanded in a market
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shortage
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when quantity demanded is more than quantity supplied
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surplus
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when quantity supplied is more than quantity demanded
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price ceiling
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a maximum price that can legally be charged for a good or service
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rent control
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a price ceiling placed on apartment rent
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price floor
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a minimum price for a good or service
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minimum wage
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a minimum price that can pay a worker for one hour of labor
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perfect competition
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a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices
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commodity
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a product, such as petroleum or milk, that is considered the same no matter who produces or sells it
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barrier to entry
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any factor that makes it difficult for a new firm to enter a market
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start-up costs
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the expenses a new business must pay before it can begin to produce and sell goods
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monopoly
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a market in which a single seller dominates
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natural monopoly
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a marketthat runs most efficiently when one large firm supplies all of the output
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government monopoly
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a monopoly created by the government
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monopolistic competition
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a market structure in which many companies sell products that are similar but nor identical
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nonprice competition
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a way to attract customers through style, service, or location, but not a lower price
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oligopoly
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a market structure in which a few large firms dominate a market
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price war
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a series of competitive price cuts that lowers the market price below the cost of production
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collusion
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an illegal agreement among firms to divide the market, set prices, or limit production
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price fixing
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an agreement among firms to charge one price for the same good
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cartel
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a formal organization of producers that agree to coordinate prices and production
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deregulation
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the removel of some government controls over a market
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sole proprietorship
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a business owned and managed by a single individual
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business organization
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the ownership structure of a company or firm
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liability
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the legal obligation to pay debts
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fringe benefits
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payments to employees other than wages or salary
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general partnership
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a type of partnership in which all partners share equally in both responsibility and liability
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LLP (Limited Liability Partnership)
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a type of partnership in which all partners are limited partners (abbreviation)
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assets
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the money and other valuables belonging to an individual or business
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corporation
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a legal entity, or being, owned by individual stockholders, each of whom has limited liability for the firm's debts
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stock
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a certificate of ownership in a corporation
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conglomerate
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a business combination merging more than three businesses that produce unrelated products or services
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multinational corporation
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a large corporation that produces and sells its goods and services in more than one country
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