1
The amount of a good or service that a consumer is willing and able to buy at various possible prices during a given period of time
what is demand?
A free enterprise economy primarily relies on the price system to answer the basic economic questions of what, how, and for whom to produce
what is the price system?
when the quantity demanded exceeds the quantity supplied
what is a shortage?
the point on the supply/demand curves intersect
what is market equilibrium?
quantity of goods and services that producers are willing to offer at various prices during a given time period
what is supply?
The tendency of consumers to substitute a similar, lower-priced product for another product that is relatively more expensive
what is the substitution effect?
government regulation that establishes a maximum price for a particular good
what is a price ceiling?
government regulation that establishes a minimum level for prices
what is a price floor?
when quantity supplied exceeds the quantity demanded
what is a surplus?
amount of money remaining after producers have paid all of their costs
what is profit?
market size, income, prices of related goods, consumer expectations
what are the determinants of demand?
when one good is connect to the supply to another similar good
what are related goods?
exists when a change in a good's price has little impact on the quantity demanded
what is inelastic demand?
any good or service that is consumed by all members of a group
lists each quantity of a product that producers are willing to supply at various market prices
what are supply schedules?
what are complementary goods?
Goods are exchanged illegally at prices that are higher than officially established prices
what are black markets?
information, incentives, choice, efficiency, flexibility
what are the benefits of the supply system?
prices of resources, government tools, technology, competition, prices of related goods, producer expectations
what are the determinants of supply?
degree to which price changes affect the quantity supplied
what is the elasticity of supply?
The degree to which changes in a good’s price affect the quantity demanded by consumers
what is elasticity of demand?
A system in which a government or other institution decides how to distribute a product
what is rationing?
As the system reacts to things like; severe weather, natural disasters, worker protests and other things, prices can swing quickly between extremes
what is instability?
production of goods sometimes results in side effects for people not directly connected with the production or consumption of the goods
what are externalities?
taxes, subsidies, regulation
what are government tools?