Unit 4 Key Terms
Demand
The entire relationship between the various possible prices of a product or service and the quantity demanded at each price, expressed through either a schedule or graph
Market structure
Term used to describe the organization and nature of a market or an industry, particularly whether it is competitive or concentrated in nature.
Supply schedule
A table depicting the relationship between the price of a product and the quantity supplied (offered for sale).
Equilibrium quantity
The quantity sold (bought) at the equilibrium price.
Total revenue Equation
Quantity demand x Price
Complementary Good
A product that is bought in combination with another product.
Concentrated industry
An industry that is dominated by a few large firms and is not easily entered by new competitors.
Supply curve
A graphical representation of a supply schedule.
Price support
An artificially high price held above the equilibrium level by
the government.
Law of demand
As price goes up, quantity demanded goes down (vice versa)
Elastic Demand
The term used to describe demand if a price increase causes a reduction in total sales revenue.
Price-maker
Term used to describe the position of the dominant firm(s) in a concentrated industry, which can influence the price of the product.
Elastic supply
A situation in which the quantity supplied increases readily when the price increases.
Price control
Law of supply
As price goes up, quantity supplied goes down (vice versa)
Inelastic Demand
The term used to describe demand if a price increase causes an increase in total sales revenue,
Market power
The ability to raise one’s prices usually associated with a dominant or monopolistic position in the market.
Inelastic supply
A situation in which quantity supplied does not increase readily when the price increases.
Changes in demand
consumer taste
price of subsities
price of complimentary goods
expected future conditions
change in population
change in consumer income
up down
down up
is…elastic
Coefficient of Elasticity
The percentage change in quantity demanded that results from a 1 percent change in price.
Price-taker
Term used to describe the position of the individual small firm in a competitive industry which is unable to influence the price of its product and is forced to accept (take) whatever price is determined in the market
Equilibrium price
A price determined in the marketplace by the interaction of supply and demand. The price where there is no surplus or shortage.
changes in supply result in (3)
production costs
price of related goods
number of products
up up down down
inelastic