AP Macroeconomics: Chapter 3 Key Terms

institution or mechanism that brings together buyers (“demanders”) and sellers (“suppliers”) of particular goods, services or resources

schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time

table illustrating the various possible prices and corresponding quantities demanded over a specific time period for a particular good

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

principle that as a consumer increases the consumption of a good or service, the marginal utility (satisfaction) obtained from each additional unit of the good or service decreases

change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product’s price

downward-sloping curve that appears on a graph illustrating demand (with price per unit on vertical axis and quantity demanded over a time period on the horizontal axis)

factors other than price that determine the quantities demanded for a good or service, A.K.A. demand shifters (Basic Demand Determinants: consumer preferences, the number of consumers in the market, consumers’ incomes, the prices of related goods, and consumer expectations about future prices and incomes)

good or service whose consumption increases when income increases (and conversely), price remaining constant

good or service whose consumption declines when income increases (and conversely), price remaining constant

products and services that can be used in place of each other: when the price of one falls, the demand for the other product falls (and conversely)

products and services that are used together: when the price of one falls, the demand for the other increases (and conversely)

change in the quantity demanded of a good or service at every price; shift of the demand curve to the left or right

change from one price-quantity combination to another on a fixed demand curve or schedule

schedule showing the amounts of a good or service that sellers (or a seller) will offer at various prices during some period

table illustrating the various possible prices and corresponding quantities supplied over a specific time period for a particular good

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

downward-sloping curve that appears on a graph illustrating demand (with price per unit on vertical axis and quantity supplied over a time period on the horizontal axis)

factors other than price that determine the quantities supplied of a good or service, A.K.A. supply shifters (Basic Supply Determinants: resource prices, technology, taxes and subsidies, prices of other goods, price expectations, and the number of sellers in the market)

change in the quantity supplied of a good or service at every price; shift of the supply curve to the left or right

change from one price-quantity combination to another on a fixed supply curve or schedule

amount by which the quantity supplied of a product exceeds the quantity demanded at a specific (above-equilibrium) price

amount by which the quantity demanded of a product exceeds the quantity supplied at a particular (below-equilibrium) price

price in a competitive market at which the quantity demanded and the quantity supplied are equal, there is neither a shortage nor a surplus, and there is no tendency for the price to rise or fall

quantity demanded and supplied at the equilibrium price in a competitive market

ability of market forces in competitive markets to equalize quantity demanded and quantity supplied and to eliminate shortages and surpluses via changes in prices

legally established maximum price for a good or service

legally determined price above the equilibrium price

change in the quantity demanded of a consumer good that results from a change in the product’s price