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25 Cards in this Set
- Front
- Back
Market Economy |
resources are allocated among households and firms with little or no government interference |
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Competitive Market |
exists when there are so many buyers and sellers that each has only a small impact on the market price and output |
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Imperfect Market |
one in which either the buyer or the seller has an influence on the market price |
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Monopoly |
exists when a single company supplies the entire market for a particular good or service |
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Quantity Demanded |
the amount of a good or service that buyers are willing and able to purchase at the current price |
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Law of Demand |
states that, all other things being equal, quantity demanded falls when prices rise, and rises when prices fall |
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Demand Schedule |
a table that shows the relationship between the price of a good and the quantity demanded |
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Demand Curve |
a graph of the relationship between the prices in the demand schedule and the quantity demanded at those prices |
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Market Demand |
the sum of all the individual quantities demanded by each buyer in the market at each price |
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Normal Good
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A good consumers buy more of as income rises, holding other things constant
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Inferior Good |
purchased out of necessity rather than choice |
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Complements |
two goods that are used together; when price of complementary good rises, the demand for the related good goes down |
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Substitutes |
two goods that are used in place of each other; when the price of a substitute good rises, the quantity demanded falls and the demand for the related good goes up |
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Quantity Supplied |
the amount of a good or service that producers are willing and able to sell at the current price |
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Law of Supply |
states that all other things being equal, the quantity supplied of a good rises when the price of good rises, and falls when the price of the good falls |
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Supply Schedule |
a table that shows the relationship between the price of a good and the quantity supplied |
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Supply Curve |
graph of the relationship between the prices in the supply schedule and the quantity supplied at those prices |
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Market Supply |
the sum of the quantities supplied by each seller in the market at each price |
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Inputs |
resources used in the production process |
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Equilibrium |
occurs at the point where the demand curve and the supply curve intersect |
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Equilibrium Price |
the price at which the quantity supplied is equal to the quantity demanded |
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Equilibrium Quantity |
the amount at which the quantity supplied is equal to the quantity demanded |
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Law of Supply and Demand |
states that the market price of any good will adjust to bring the quantity supplied and the quantity demanded into balance |
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Shortage |
occurs whenever the quantity supplied is less than the quantity demended |
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Surplus |
occurs whenever the quantity supplied is greater than the quantity demanded |