Micro Economics Definitions .2 0.0 / 5 ? EconomicsPrice determination in a competitive marketASAQA Created by: SophCreated on: 03-04-16 17:46 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 1 of 19 Equilibrium price This is the price at which planned demand equals planned supply 2 of 19 Effective demand This is the desire for a good or service with the ability to pay 3 of 19 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 4 of 19 Normal good This is a good for which as income increases so does demand. As income decreases so does demand 5 of 19 Inferior good This is a good for which as income increases, demand decreases 6 of 19 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 7 of 19 Income Elasticity of Demand (YED) This measures the responsiveness of a change in quantity demanded of a good relative to a change in income 8 of 19 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 9 of 19 Price Elasticity of Supply This measures the responsiveness of a change in quantity supplied relative to a change in price of that good 10 of 19 Profit The difference between total sales revenue and total costs of production 11 of 19 Total revenue PxQ 12 of 19 Joint supply When one good is produced another is produced from the same raw materials 13 of 19 Competing supply When one good is produced another good cannot be produced from the same raw materials 14 of 19 Complementary good This is a good in joint demand. A good for which is demanded at the same time as another good 15 of 19 Substitute demand This is a good in competing demand. A good for which is used in place of another good 16 of 19 Composite demand A good for which has more than one use 17 of 19 Derived demand A good which is not demanded for itself but rather the good it produces 18 of 19 Merit good A good which its consumption leads to benefits others can enjoy 19 of 19
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