| A | B |
|---|
| Capital Market | The input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds in order to buy capital stock. |
| Complements, complementary goods | Goods that “go together”; a decrease in the price of one results in an increase in demand for the other, and vice versa. |
| Entrepreneur | A person who organizes, manages, and assumes the risks of a firm, taking a new idea or new product and turning it into a successful business. |
| Equilibrium | The condition that exists when quantity supplied and quantity demanded are equal. At equilibrium, there is no tendency for price to change. |
| Excess Demand | The condition in which a product is demanded more than it is supplied. |
| Excess Supply | The condition in which a products’ supply is greater than the demand for it. |
| Factors of Production | The inputs into the production process. Land, labor, and capital and entrepreneurship |
| Households | The consuming units in an economy. |
| Income | The sum of all a household’s wages, salaries, profits, interest payments, rents and other forms of earnings in a given period of time. It is a flow measure. |
| Inferior goods | Goods for which demand falls when income rises. |
| Input or factor markets | The markets in which the resources are used to produce products are exchanged. |
| Labor market | - The input/factor market in which households supply work for wages to firms that demand labor. |
| Land market | - The input/factor market in which households supply land or other real property in exchange for rent. |
| Law of demand | The negative relationship between price and quantity demanded: As price rises, quantity demanded decreases. As price falls, quantity demanded rises. |
| Law of supply | The positive relationship between price and quantity of a good supplied: An increase in market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied. |
| Market demand | The sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service. |
| Market Supply | The sum of all that is supplied each period by all the producers of a single product. |
| Movement along a demand curve | What happens when a change in price causes quantity demanded to change. |
| Normal Goods | Goods for which demand goes up when income is higher and for which demand goes down when income is lower. |
| Perfect Substitutes | Homogeneous products. |
| Product or output markets | The markets in which goods and services are exchanged. |
| Profit | The difference between total revenues and total costs. |
| Quantity Demanded- | The amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price. |
| Quantity Supplied | The amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period. |
| Shift of demand curve | - The change that occurs in a demand curve when a new relationship between quantity demanded of a good and the price of that good is brought about by a change in the original conditions. |
| Substitutes | Goods that can serve as replacements for one another; when the price of one increases, demand for the other goes up. |
| Supply Curve |  Supply Curve |
| Supply Schedule | A chart illustrating how much of a product a firm will supply at different prices |
| Wealth or net worth | The total value of what a household owns minus what it owes. It is a stock measure |
