Market
A group of buyers and sellers of a particular good
Competitive market
A market at which there are many buyers and sellers so each has a negligible impact on the market price
Quantity demanded
An amount of good buyers are willing and able to buy
Law of demand
Other things being equal, the quantity demanded of a good decreases when the price of a good increases
Demand schedule/ curve
Schedule a table that shows
The relationship between the price of a good and the quantity demanded
Curve a graph of
Normal good
A good for which, other things being equal, an increase in income leads to an increase in demand
Inferior good
A good for which an increase in income leads to a decrease in demand
Substitute
2 goods for which an increase in the price for the one leads to an increase in the demand for the other
Complements
2 goods for which an increase in the price of one leads to the decrease in demand for another
Quantity supplied
The amount of good that sellers are willing and able to supply/sell
Law of Suuply
Others things being equal, the quantity supplied of a good rises when the price of a good increases
Supply schedule/curve
Schedule is the table that shows
The relationship between the price of a good and the quantity supplied
Curve is a graph of
Equilibrium
A situation in which the market price has reached the level at which the quantity demanded equals to the quantity supplied
Equilibrium price
The price that balances the quantity supplied and the quantity demanded
Equilibrium quantity
The quantity supplied and the quantity demanded at the equilibrium price
Surplus
A situation in which the quantity supplied exceeds the quantity demanded (Qs>Qd)
Shortage
A situation in which the quantity demanded exceeds the quantity supplied
The Las of Supply and Demand
The price of any good adjust to bring the quantity demanded and the quantity supplied of that good in balance
