Price and price system in a market economy. Market equilibrium

UNIT ONE

DEMAND. THE LAW OF DEMAND. ELASTICITY OF DEMAND

1. Complementary goods: the two goods tend to be consumed or used together in relatively fixed or standardized proportions.

2. Demand curve: the graphical representation of how demand for something varies in relation to its price.

3. Demand schedule: a table showing the quantities of a product that would be purchased at various prices at a given time.

4. Demand: the level of a consumer’s willingness, ability and desire or need that exist for particular goods or services.

5. Elastic demand: Demand for which a small change in price results in a large change in demand.

6. Elasticity: An economic concept which is concerned with a shift in either demand for or supply of an economic product as the result of a change in a product’s price.

7. Inelastic demand: Demand for which a large change in price leads to only a small change in demand.

8. Law of demand: the economic law that states that demand for a product varies inversely with its price.

9. Substitute: a product or service that partly satisfies the need of a consumer that another product or service fulfills.

UNIT TWO

SUPPLY. THE LAW OF SUPPLY. ELASTICITY OF SUPPLY

1. Elastic supply: Supply for which a percentage change in a product's price causes a larger percentage change in the quantity supplied.

2. Elasticity of supply: The degree to which supply of a commodity responds to a change in that commodity’s price.

3. Inelastic supply: Supply for which a percentage change in a product's price causes a smaller percentage change in the quantity supplied.

4. Law of supply: the economic law that states as the price of a commodity that producers are willing and able to offer for sale during a particular period of time rises (falls), the quantity of the commodity supplied goes up (decreases), all non-price determinates being equal.

5. Quantity supplied: the amount of a product that producers are willing and able to sell at a certain price during a time period, all other factors that may determine supply remaining the same.

6. Supply: the total amount of a commodity available for purchase by consumers.

7. Supply curve: the graphical representation of how supply varies as prices change.

8. Supply schedule: a table showing the quantities of a product that would be offered for sale at various prices at a given time.

UNIT THREE

PRICE AND PRICE SYSTEM IN A MARKET ECONOMY. MARKET EQUILIBRIUM

1. Equilibrium: A condition of a market in which buyers’ and sellers’ plans exactly coincide, so that the quantity supplied exactly equals the quantity demanded at a current price.

2. Equilibrium price: the price at which the quantity of goods or services offered by suppliers is exactly equal to the quantity that is demanded by purchasers in a particular time period.

3. Excess demand (shortage): the amount of a product that could be sold at a price lower than the market price.

4. Excess supply (surplus): the amount of a product available at a price higher than the market price.

5. Market price: the price that prevails in a market and at which commodities are actually exchanged for money.

6. Price: the money value of goods and services.

7. Price system: an economic system in which resources are allocated as a result of the interaction of the forces of supply and demand.

UNIT FOUR

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