Vocabulary Microeconomics chapter 3
Terms
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- Market
- a place or service that enables buyers and sellers to exchange goods and services
- barter
- the direct exchange of goods and services without the use of money
- Double coincidence of wants
- the situation that exists when A has what B wants and Bhas what A wants
- transaction costs
- the costs involved in making an exchange
- relative price
- the price of one good expressed in terms o the price of another good
- Determinats of demand
- factors other than the price of the good that influence demand: income, tastes, prices of related goods and services, expectations, # of buyers
- demand shedule
- a table or list of the prices and the corresponding quantities demanded of a particular good or service
- demand curve
- a graph of a demand schedule that measures price on the vertical axis and quantity demanded on the horizontal axis
- normal goods
- goods for which demand incteases as income increases
- inferior goods
- goods for which demand decteases as income increases
- Substitute goods
- goods that can be used in place of each other; as the price of one rises, the demand for the other rises
- complementary goods
- goods that are used together; as the price or one rises, the demand for the other falls
- Supply
- amount of a good or service that producers are willing and able to offer for sale at each possible price during a period of time, everything held const.
- quantity supplied
- the amount sellers are willing and able to offer at a given price during a particular period of time, everything else held constant
- law of supply
- quantity of well-defined good or service that producers are willing and able to offer for sale during a particular period of time
- determinants of supply
- factors other than the price of the good that influence supply: price of resources, technology production, expectations of producers, # of producers, price of related goods and services
- supply schedule
- table or list of prices and corresponding quantities supplied of a particular good or service
- supply curve
- graph of a supply schedule that measures price on the vertical axis and quantity supplied on the horizontal axis
- productivity
- the quantity of output produced per unit of resource
- equilibrium
- the price and quantity at which quantity demanded and quantity supplied are equal
- disequilibrium
- a point at which quantity demanded and quantity supplied are not equal at a particular price
- surplus
- a quantity supplied that is larger than the quantity demanded at a given price; it occurs whenever the price is greater than the equilibrium price
- shortage
- a quantity supplied that is smaller than the quantity demanded at a given price; it occurs whenever the price is less than the equilibrium price
- exchange rate
- the rate at which monies of different countries are exchanged
- price floor
- a situation in which the price is not allowed to decease below a certain level
- price ceiling
- a situation in which the price is not allowed ot rise above a certain level