Macro Chapter 3
Terms
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- Change in Quantity demanded
- A movement between points along a stationary demand curve, cetris paribus
- Change in demand
- an increase or decrease in the quantity demanded at each possible price. An increase in demand is a rightward shift in the entire demand curve. A decrease in demand is a leftwared shift in the entire demand curve
- normal Good
- Any good for which there is a direct relationship between changes in income and its demnd curve
- Inferior Good
- Any good for which there is an inverse relationship between changes in income and its demand curve
- Substitute Good
- A good that competes with another good for consumer purchases. As a result, there is a direct relationship between a price change for one good and the demand for its "competitor" good.
- Complementary good
- A good that is jointly consumed with another good. As a result, there is an inverse relaitonship between a price change for one good and th edemand for the "go together" good.
- Law of supply
- The principle that there is a direct relaionship between the price of a good and th equantity sellers are willing to offer for sale in a defined time period, ceteris paribus.
- Supply
- A curve or schedule showing th evarious quantities of a product sellers are wiling to produce and offer for sale at possible prices during a specified time period, ceteris paribus.
- Change in quantity supplied
- A mvement between points along a stationary supply curve, cetris paribus.
- Change in supply
- An increase or decrease in the quantity supplied at each possible price. An increase in supply is a rightward shift in the entire supply curve. A decrease in supply is a leftward shift in th eentire supply curve.
- Market
- Any arrangement in which buyers and sellers interact to determine the price and quantity of goods an dservices exchanged
- surplus
- A market condition that existing at any price where the quantity supplied is greater than the quantity demanded
- shortage
- A market condition exsiting at any price where the quantity supplied is less tan the quantity demanded
- Equilibrium
- A market condition tha toccurs at any price and quantity where the quantity demanded and th equantity supplied are equal
- Price system
- A mechanism that uses the forces of supply and demand to creat an equilibrium through rising and falling prices