| A | B |
|---|
| demand | amount of good or service consumers able & willing to buy at various prices during specified time |
| supply | amount of good or service producers can sell at various prices during a specified time |
| market | process of freely exchanging goods & services between buyers & sellers |
| voluntary exchange | transaction in which buyer & seller work out their own terms of exchange |
| law of demand | economic rule stating that quantity demanded and price move in opposite directions |
| quantity demanded | amount of good or service a consumer will purchase at a specific price |
| real income effect | economic rule stating consumers cannot keep buying same amount of product if its price rises and their income stays the same |
| substitution effect | economic rule stating if two items satisfy the same need & price of one rises, people will buy the other |
| marginal utility | an additional amount of satisfaction |
| laaw of diminishing marginal utility | rule stating that additional satisfaction consumer gets from a product will lessen with each unit purchased |
| demand schedule | table showing quantities demanded at different possible prices |
| demand curve | downward sloping line that shows in graph form the quantities demanded at eachpossible price |
| complimentary good | a product often used with another product |
| elasticity | economic concept about consumers' response to an increase or decrease in price of a product |
| price elasticity of demand | economic concept that deals with how much demand varies according to price change |
| elastic demand | a rise or fall in a product's price greatly affects the amount that people are willing to buy |
| inelastic demand | product's price change has little impact on the quantity demanded |
| law of supply | economic rule stating that price & quantity demanded move in the same direction |
| quantity supplied | amount of good or service a producer can supply at a given price |
| supply schedule | table showing quantities supplied at different possible prices |
| supply curve | upward-sloping line that shows in graph form the quantities supplied at each possible price |
| technology | any use of land, labor, and capital that produces goods &: services more efficiently |
| law of diminishing returns | economic rule, as more units of production (eg labor) are added to other factors (eg equipment), total production increases, but at a diminishing rate |
| equilibrium price | price at which amount producers are iwlling to supply equals the amount consumers are willing to buy |
| shortage | quantity demanded is greater than quantity supplied at current price |
| surplus | quantity supplied is greater than quantity emanded at current price |
| price ceiling | legal maximum price that may be charged for a good or service |
| rationing | distribution of goods & services based on something other than price |
| black market | "underground" or illegal market where goods are traded above their legal price or illegal goods are sold |
| price floor | legal minimum price below which a good or service may not be sold |
| utility | ability of any good or service to satisfy consumer wants |
