8 Chapter 3 Key Terms
Key Terms
ceteris paribus: other things being equal
complements: goods that are often used together so that consumption of one good tends to enhance consumption of the other
consumer surplus: the extra benefit consumers receive from buying a good or service, measured by what the individuals would have been willing to pay minus the amount that they actually paid
deadweight loss: the loss in social surplus that occurs when a market produces an inefficient quantity
demand: the relationship between price and the quantity demanded of a certain good or service
demand curve: a graphic representation of the relationship between price and quantity demanded of a certain good or service, with quantity on the horizontal axis and the price on the vertical axis
demand schedule: a table that shows a range of prices for a certain good or service and the quantity demanded at each price
economic surplus: see social surplus
equilibrium: the situation where quantity demanded is equal to the quantity supplied; the combination of price and quantity where there is no economic pressure from surpluses or shortages that would cause price or quantity to change
equilibrium price: the price where quantity demanded is equal to quantity supplied
equilibrium quantity: the quantity at which quantity demanded and quantity supplied are equal for a certain price level
excess demand: at the existing price, the quantity demanded exceeds the quantity supplied; also called a shortage
excess supply: at the existing price, quantity supplied exceeds the quantity demanded; also called a surplus
factors of production: the resources such as labor, materials, and machinery that are used to produce goods and services; also called inputs
inferior good: a good in which the quantity demanded falls as income rises, and in which quantity demanded rises and income falls
inputs: the resources such as labor, materials, and machinery that are used to produce goods and services; also called factors of production
law of demand: the common relationship that a higher price leads to a lower quantity demanded of a certain good or service and a lower price leads to a higher quantity demanded, while all other variables are held constant
law of supply: the common relationship that a higher price leads to a greater quantity supplied and a lower price leads to a lower quantity supplied, while all other variables are held constant
normal good: a good in which the quantity demanded rises as income rises, and in which quantity demanded falls as income falls
price: what a buyer pays for a unit of the specific good or service
price ceiling: a legal maximum price
price control: government laws to regulate prices instead of letting market forces determine prices
price floor: a legal minimum price
producer surplus: the extra benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept
quantity demanded: the total number of units of a good or service consumers are willing to purchase at a given price
quantity supplied: the total number of units of a good or service producers are willing to sell at a given price
shift in demand: when a change in some economic factor (other than price) causes a different quantity to be demanded at every price
shift in supply: when a change in some economic factor (other than price) causes a different quantity to be supplied at every price
shortage: at the existing price, the quantity demanded exceeds the quantity supplied; also called excess demand
social surplus: the sum of consumer surplus and producer surplus
substitute: a good that can replace another to some extent, so that greater consumption of one good can mean less of the other
supply: the relationship between price and the quantity supplied of a certain good or service
supply curve: a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis
supply schedule: a table that shows a range of prices for a good or service and the quantity supplied at each price
surplus: at the existing price, quantity supplied exceeds the quantity demanded; also called excess supply
total surplus: see social surplus
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