Term Definition
demand the desire, willingness, and ability to buy a good or service.
demand schedule table showing quantities demanded at different possible prices.
demand curve downward-sloping line that graphically shows the equantities demanded at each possible price.
law of deman the concept that people are normally willing to buy less of a product if the price is high and more of it if the price is low.
utility the amount of satisfaction one gets from goods or service.
marginal utility additional use that is derived from each unit acquired.
substitute a competing product that consumers can use in place of another.
complement product often used with another product.
demand elasticity measure of responsiveness relating change in quantity demanded to a change in price.
supply the amount of goods and service that producers are able and willing to sell at various prices during a specified time period.
law of supple the principle that suppliers will normally offer more for sale at higher prices and less at lower prices.
supply schedule table showing quantities supplied at different possible prices.
supply curve upward-sloping line that graphically shows the quantities supplied at each possible price.
profit the money a business receives for its products or services over and above its costs.
market supply the total of all supply schedules of all the businesses that provide the same good or service.
productivity the degree to which resources are being used efficiently to produce goods and services.
technology the methods or processes used to make goods and services.
subsidy a government payment to an individual, business, or group in exchange for certain actions.
supply elasticity responsiveness of quantity supplied to a change in price.
surplus situation in which quantity supplied is greater than quantity demanded; situation in which government spends less than it collects in revenues.
shortage situation in which quantity demanded is greater supplied.
equilibrium price the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy.
price ceiling maximum price that can be charged for goods and service, set by the government.
price floor minimum price that can be charged for goods and services, set by the government.
minimum wage lowest legal wage that can be paid to most U.S workers.
chapter 21

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