| A | B |
|---|
| Pure Market Economy | a theoretical market economy where there is NO government involvement |
| Market | a place where buyers and sellers exchange goods and services |
| Price Control | Established by the government to regulate supply and demand |
| Surplus | a situation where the quantity supplied is more than the quantity demanded at a given price |
| Shortage | a situation where the quantity supplied is less than the quantity demanded at a given price |
| Price ceiling | this price control sets a maximum legal price that can be charged for a product or service |
| Price floor | this price control sets the lowest legal price that can be charged for a product or service |
| Substitute | competing products that can be used in place of one another |
| Compliment | goods are compliments when the use of one increases the use of the other |
| Equilibrium | – price where quantity supplied equals quantity demanded |
| Market Cleaning Price | price that clears the market (empties the market place of all product – all products sell) |
| Profit | income or sales less related expenses |
| Elasticity | The degree to which changes in price effect changes in demand. |
| Inelastic demand | A given change in price causes a relatively small change in demand |
| Unit elasticity | exists when the quantity demanded changes by the same percent as changes in price |
| Elasticity Coefficient | a formula to determine if something is elastic or inelastic |
