Competitive Markets

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Market
Where or when buyers and sellers meet to trade or exchange products. A system that determines price.
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Sub-Market
A market segment that is made up of customers with similar wants. E.g. the computer market has: a) desktop and b) notebook submarkets.
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National Demand
The desire for a product.
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Effective Demand
The willingness and ability to buy the product.
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Ceteris Paribus
Assumes other variables remain unchanged.
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Demand Curve
This shows the relationship between the quantity demanded and the price of a product.
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Demand Schedule
The data that is used to draw the demand curve for a product.
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Movement along the demand curve
This is in response to a change in the price of a product.
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Consumer Surplus
The extra amount that a consumer is willing to pay for a product above the price that is actually paid.
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Disposable Income
Income after taxes on income have been deducted and state benefits have been added.
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Real Disponible Income
Income after taxes on income have been deducted and state benefits have been added and the result has been adjusted to take into account changes in the price level.
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Normal Goods
Goods for which an increase in income leads to an increase in demand.
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Inferior Goods
Goods for which an increase in income leads to a fall in demand.
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Substitutes
Alternative products that can be used to satisfy the same given want or need. E.g. butter or margarine
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Complements
Goods that have joint demand. E.g. cars and petrol
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Shift in demand
This where a change in a non-price factor leads to an increase or decrease in demand for a product.
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Profit
PROFIT = Total Revenue - Total Costs
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Supply Curve
This shows the relationship between the quantity supplied and the price of a product.
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Supply Schedule
The data used to draw up the supply curve of a product.
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Producer Surplus
The difference between the price a producer is willing to accept and what is actually paid.
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Shift in supply
Occurs when a change in a non-price influence leads to an increase or decrease in the willingness of a producer to supply a product.
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Price
The amount of money that is paid for a given amount of a particular good or service.
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Equilibrium Price
The price where demand and supply are equal.
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Equilibrium Quantity
The quantity that is demanded and supplied at the equilibrium price.
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Disequilibrium
Any position in a market where demand and supply are not equal.
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Surplus
An excess of supply over demand.
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Shortage
An excess of demand over supply.
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Elasticity
The extent that buyers and sellers respond to a change in market conditions.
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Price Elasticity of Demand (PED)
The responsiveness of the quantity demanded to a change in the price of the product.
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Price Elastic
Where the percentage change in the quantity demanded in sensitive to a change in price.
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Price Inelastic
Where the percentage change in the quantity demanded is insensitive to a change in price.
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Income Elasticity of Demand (YED)
The responsiveness of demand to a change in income.
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Income Inelastic
Goods for which a change in income produces a less than proportionate change in demand.
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Income Elastic
Goods for which a change in income produces a greater proportionate change in demand.
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Cross Elasticity of Demand (XED)
The responsiveness of demand for one product in relation to a change in the price of another product.
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Price Elasticity of Supply (PES)
The responsiveness of the quantity supplied to a change in the price of the product.
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Allocative Efficiency
When resources are being used to produce items that are most valued by society - therefore consumer satisfaction is maximised.
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Productive Efficiency
When output is maximised from given inputs - products are being made a the lowest possible unit cost.
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Economic Efficiency
Occurs when a society produces products that consumers most value at the lowest possible unit cost. Allocative and Productive efficiency are both achieved.
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Other cards in this set

Card 2

Front

A market segment that is made up of customers with similar wants. E.g. the computer market has: a) desktop and b) notebook submarkets.

Back

Sub-Market

Card 3

Front

The desire for a product.

Back

Preview of the back of card 3

Card 4

Front

The willingness and ability to buy the product.

Back

Preview of the back of card 4

Card 5

Front

Assumes other variables remain unchanged.

Back

Preview of the back of card 5
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