Micro Economics Definitions .2

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Competitive market
A market in which the large number of buyers and sellers possess good market information and can easily enter or leave the market
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Equilibrium price
This is the price at which planned demand equals planned supply
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Effective demand
This is the desire for a good or service with the ability to pay
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Market demand
This is the quantity of a good or service that all the consumers in a market are willing and able to but at different market prices
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Normal good
This is a good for which as income increases so does demand. As income decreases so does demand
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Inferior good
This is a good for which as income increases, demand decreases
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Price Elasticity of Demand (PED)
This measures the responsiveness of a change in quantity demanded of a good relative to a change in price of that good
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Income Elasticity of Demand (YED)
This measures the responsiveness of a change in quantity demanded of a good relative to a change in income
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Cross Elasticity of Demand
This measures the responsivess of a change in quantity demanded of one good relative to a change in price of another good
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Price Elasticity of Supply
This measures the responsiveness of a change in quantity supplied relative to a change in price of that good
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Profit
The difference between total sales revenue and total costs of production
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Total revenue
PxQ
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Joint supply
When one good is produced another is produced from the same raw materials
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Competing supply
When one good is produced another good cannot be produced from the same raw materials
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Complementary good
This is a good in joint demand. A good for which is demanded at the same time as another good
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Substitute demand
This is a good in competing demand. A good for which is used in place of another good
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Composite demand
A good for which has more than one use
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Derived demand
A good which is not demanded for itself but rather the good it produces
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Merit good
A good which its consumption leads to benefits others can enjoy
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Other cards in this set

Card 2

Front

This is the price at which planned demand equals planned supply

Back

Equilibrium price

Card 3

Front

This is the desire for a good or service with the ability to pay

Back

Preview of the back of card 3

Card 4

Front

This is the quantity of a good or service that all the consumers in a market are willing and able to but at different market prices

Back

Preview of the back of card 4

Card 5

Front

This is a good for which as income increases so does demand. As income decreases so does demand

Back

Preview of the back of card 5
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