Key Terms F581 - Chapter 2

key terms unit 2

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Market
where or when buyers and sellers meet to trade or exchange pro
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Sub-market
a recognised or distinguishable part of a market. Also known as a market segment
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Demand
the quantity of a product that consumers are able and willing to purchase at various prices over a period of time
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Notional Demand
the desire for a product
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Effective Demand
the willingness and ability to buy a product
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Ceteris Paribus
(Latin: other things being equal); assuming 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 disposable 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
competing goods
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Complements
goods for which there is a joint demand
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Change in demand
this is where a change in a non-price factor leads to an increase or decrease in demand for a product
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Supply
the quantity of a product that producers are willing and able to provide at different market prices over a period of time
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Profit
the difference between the total revenue (sales revenue) of a producer and total cost
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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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Change 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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Clearing price
same as equilibrium price
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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 the 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 to which buyers and sellers respond to a change in market condition
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Price elasticity of demand
the responsiveness of the quantity demanded to a change in the price of a product
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Price elastic
where the percentage change in the quantity demanded is sensitive to a change in price
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Price inelastic
where the percentage change in the quantity demanded in insensitive to a change in price
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Income elasticity of demand
the responsiveness of demand to a change in n=incoem
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Normal goods
goods with a positive income elasticity of demand
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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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Inferior goods
goods for which an increase in income leads to a fall 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 a product
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Efficiency
where the best use of resources is made for the benefit of consumers
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Allocative efficiency
where consumer satisfaction is maximised
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Other cards in this set

Card 2

Front

Sub-market

Back

a recognised or distinguishable part of a market. Also known as a market segment

Card 3

Front

Demand

Back

Preview of the front of card 3

Card 4

Front

Notional Demand

Back

Preview of the front of card 4

Card 5

Front

Effective Demand

Back

Preview of the front of card 5
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