Demand – The quantity of a good or service that consumers are willing and able
to buy at different prices.
Law of Demand – As the price of a good or service decreases, the quantity
demanded increases, and vice versa.
Market Demand – The total quantity demanded by all consumers in the market
at each price level.
Shifts in Demand – A change in any factor other than price that causes the
demand curve to shift left or right.
Substitutes – Goods that can replace each other.
Complements – Goods that are used together.
Elasticity of Demand – The responsiveness of demand to changes in price or
income.
Supply – The quantity of a good or service that producers are willing and able to
sell at different prices.
Law of Supply – As the price of a good or service increases, the quantity
supplied increases, and vice versa.
Market Supply – The total quantity supplied by all producers in the market at
each price level.
Shifts in Supply – A change in any factor other than price that causes the
supply curve to shift left or right.
Factors of Production – Resources used in the production of goods and
services, such as land, labor, and capital.
Subsidy – A payment by the government to producers to encourage production
or lower prices.
Equilibrium Price – The price at which the quantity demanded equals the
quantity supplied.
Surplus – A situation where the quantity supplied exceeds the quantity
demanded at a given price.
Shortage – A situation where the quantity demanded exceeds the quantity
supplied at a given price.
Market Clearing – The situation where there is no surplus or shortage; the
market has cleared.
Price Mechanism – The way in which prices adjust to balance supply and
demand in a market.
Price Elasticity of Demand (PED) – The responsiveness of the quantity
demanded to a change in price.
Price Elasticity of Supply (PES) – The responsiveness of the quantity supplied
to a change in price.
Income Elasticity of Demand (YED) – The responsiveness of demand to
changes in consumer income.
Cross Elasticity of Demand (XED) – The responsiveness of demand for one
good to changes in the price of another good.
Unitary Elasticity – When the percentage change in quantity demanded is
exactly equal to the percentage change in price.
Elastic Demand – When the percentage change in quantity demanded is greater
than the percentage change in price.
Inelastic Demand – When the percentage change in quantity demanded is less
than the percentage change in price.
Perfectly Elastic Demand – When any price change leads to an infinite change
in quantity demanded.
Perfectly Inelastic Demand – When a price change has no effect
Total Revenue – The total amount of money a firm receives from the sale of its
goods, calculated as price × quantity.
Elastic Supply – When the percentage change in quantity supplied is greater
than the percentage change in price.
Inelastic Supply – When the percentage change in quantity supplied is less than
the percentage change in price.
Perfectly Elastic Supply – When any price change leads to an infinite change in
quantity supplied.
Perfectly Inelastic Supply – When a price change has no effect on the quantity
supplied.