A line on a graph that represents the total quantity of a good or service consumed at each price level within a range of prices. For most normal goods, the quantity demanded decreases as the price increases, producing a downwardly sloping line on the graph.
Allocative efficiency is an economic concept that occurs when resources are distributed in a way that maximizes the net benefit to society. It reflects a situation where goods and services are produced according to consumer preferences, and marginal cost equals marginal benefit.
A Clearing Market is a situation in which supply and demand reach equilibrium quickly, resulting in no excess supply or demand at the market price. Typically, this involves short-lived goods where suppliers are motivated to sell their inventories promptly without price constraints.
Competitive equilibrium refers to a market state where supply equals demand, resulting in an equilibrium price where no buyer or seller has an incentive to change their behavior.
Consumer sovereignty refers to the ability of consumers to obtain exactly what they want by paying a price that is satisfactory to suppliers. It is considered a prerequisite of properly functioning markets. However, sovereignty can be limited by factors such as lack of information, constraints on prices and supplies, and third-party influences on purchasing decisions.
The equilibrium price is the price at which the quantity of goods producers wish to supply matches the quantity demanders want to purchase.
The equilibrium quantity is the amount of a good that will be produced and sold when the market for the good is in equilibrium, where demand equals supply.
Inelastic supply and demand refer to situations where the quantity supplied or demanded of a good or service changes very little in response to changes in its price. This concept is crucial in economics as it affects pricing, revenue, and market equilibrium.
An economic principle that states the price of a good is determined by the relationship between its supply and demand in a free market. Adjustments in supply or demand lead to changes in price to reach market equilibrium.
Market equilibrium is a situation in a market where the prevailing price causes producers to produce exactly the quantity demanded by consumers at that same price. A market in equilibrium will not experience changes in price or quantity produced.
The monopoly price is the price arrived at in a market where the supply is controlled by a monopoly, typically higher than the price that would prevail under competitive conditions.
The normal price refers to the price level that goods or services typically command in a market over the long term. It is a stable price expectation absent extraordinary market fluctuations like sudden shortages or surpluses.
Overproduction refers to the excessive production of goods beyond consumer demand, resulting in surplus inventory and potential financial losses for businesses.
The amount of a good or service that will be brought to market at a given price. The schedule of quantities supplied at each market price defines the Aggregate Supply Curve.
