{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Supply4 - Equilibrium Price The price of a good or service...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Supply Terms Aggregate Demand - The combined demand of all buyers in a market. Aggregate Supply - The combined supply of all sellers in a market. Buyer - Someone who purchases goods and services from a seller for money. Competition - In a market economy, competition occurs between large numbers of buyers and sellers who vie for the opportunity to buy or sell goods and services. The competition among buyers means that prices will never fall very low, and the competition among sellers means that prices will never rise very high. This is only true if there are so many buyers and sellers that none of them has a significant impact on the market equilibrium. Demand - Demand refers to the amount of goods and services that buyers are willing to purchase. Typically, demand decreases with increases in price, this trend can be graphically represented with a demand curve. Demand can be affected by changes in income, changes in price, and changes in relative price.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Equilibrium Price - The price of a good or service at which quantity supplied is equal to quantity demanded. Also called the market-clearing price. Equilibrium Quantity - Amount of goods or services sold at the equilibrium price. Because supply is equal to demand at this point, there is no surplus or shortage. Firm - Unit of sellers in microeconomics. Because it is seen as one selling unit in microeconomics, a firm will make coordinated efforts to maximize its profit through sales of its goods and services. The combined actions and preferences of all firms in a market will determine the appearance and behavior of the supply curve. Goods and Services - Products or work that are bought and sold. In a market economy, competition among buyers and sellers sets the market equilibrium, determining the price and the quantity sold. Horizontal addition - The process of adding together all quantities demanded at each price level to find aggregate demand...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online