Demand
What is the Law of Demand?
The law stating that as price increases, quantity demanded decreases
What is the Law of Supply?
The law stating that higher prices lead to higher quantity supplied
What is price elasticity of demand?
Measures responsiveness of quantity demanded to price
What is perfect competition?
A market with many buyers and sellers and identical products
What is indirect tax?
A tax on goods
What is income / tastes / population / prices of related goods?
A factor that can shift demand (not price)
What is cost of production / technology / taxes / subsidies?
A factor that shifts supply
What is elastic demand?
Demand that changes a lot when price changes
What is a monopoly?
A market dominated by one seller
What is a price ceiling?
A maximum legal price
What is a normal good?
When demand increases due to higher income for normal goods
What is technological improvement?
When production becomes cheaper due to better methods
What is inelastic demand?
Demand that barely changes when price changes
What is an oligopoly?
A market with a few large firms
What is a price floor?
A minimum legal price
What is an inferior good?
A good for which demand rises when income falls
What is a subsidy?
A payment that lowers production costs
What is % change in quantity รท % change in price?
Formula for elasticity
What is product differentiation?
Products that are similar but not identical
What is government intervention?
Government action to fix market failure
What is the bandwagon effect?
The effect where people buy more because others are buying it
What is market entry or number of sellers?
The number of firms in a market affecting supply
What is elastic?
Goods with many substitutes tend to be this
What are barriers to entry?
Barriers that prevent firms from entering a market
What is a negative externality?
Extra cost imposed on society not reflected in price