Campbell R. McConnell,
University of Nebraska, Lincoln
Stanley L. Brue,
Pacific Lutheran University
Thomas P. Barbiero,
Ryerson University
| Change in demand | A shift of the demand curve to the left or right.
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| Change in quantity demanded | A movement from one point to another on a fixed demand curve caused by a change in price of the product under consideration.
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| Change in quantity supplied | A movement from one point to another on a fixed supply curve caused by a change in the price of a product under consideration.
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| Change in supply | A shift of the supply curve to the left or right.
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| Complementary goods | Products and services that are used together; when the price of one falls the demand for the other increases (and conversely).
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| Demand | A schedule showing the amounts of a good or service buyers (or a buyer) wish to purchase at various prices during some time period.
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| Demand curve | A curve that illustrates demand.
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| Determinants of demand | Factors other than its price that determine the quantities demanded of a good or service.
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| Determinants of supply | Factors other than its price that determine the quantities supplied of a good or service.
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| Equilibrium price | The price in a competitive market at which the quantity demanded and the quantity supplied are equal, where there is neither a shortage nor a surplus, and where there is no tendency for price to rise or fall.
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| Equilibrium quantity | The quantity demanded and supplied at the equilibrium price in a competitive market.
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| Income effect | A change in the quantity demanded of a product that results from the change in real income (purchasing power) produced by a change in the product's price.
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| Inferior good | A good or service whose consumption declines as income rises (and conversely), price remaining constant.
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| Law of demand | The principle that, other things equal, an increase in a product's price will reduce the quantity of it demanded; and conversely for a decrease in price.
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| Law of supply | The principle that, other things equal, an increase in the price of a product will increase the quantity of it supplied; and conversely for a price decrease.
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| Marginal utility | The extra utility a consumer obtains from the consumption of one additional unit of a good or service; equal to the change in total utility divided by the change in the quantity consumed.
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| Market | Any institution or mechanism that brings together buyers (demanders) and sellers (suppliers) of a particular good or service.
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| Normal good | A good or service whose consumption increases when income increases and falls when income decreases, price remaining constant.
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| Rationing function of prices | The ability of market forces in a competitive market to equalize quantity demanded and quantity supplied and to eliminate shortages and surpluses via changes in prices.
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| Shortage | The amount by which the quantity demanded of a product exceeds the quantity supplied at a particular (below equilibrium) price.
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| Substitute goods | Products or services that can be used in place of each other. When the price of one falls the demand for the other falls, and conversely with an increase of price.
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| Substitution effect | (1) A change in the price of a consumer good changes the relative expensiveness of that good and hence changes the consumer's willingness to buy it rather than other goods. (2) The effect of a change in the price of a resource on the quantity of the resource employed by a firm, assuming no change in its output.
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| Supply | A schedule showing the amounts of a good or service sellers (or a seller) will offer at various prices during some period.
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| Supply curve | A curve that illustrates supply.
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| Surplus | The amount by which the quantity supplied of a product exceeds the quantity demanded at a specific (above-equilibrium) price.
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2002 McGraw-Hill Higher Education