Ceteris paribus.Other things being equal
Complements.Goods that are often used together so that consumption of one good tends to
enhance consumption of the other
Consumer surplus.The extra benefit consumers receive from buying a good or service, measured
by what the individuals would have been willing to pay minus the amount that they actually paid
Deadweight loss.The loss in social surplus that occurs when a market produces an inefficient
quantity
Demand.The relationship between price and the quantity demanded of a certain good or service
Demand curve.A graphic representation of the relationship between price and quantity demanded
of a certain good or service, with quantity on the horizontal axis and the price on the vertical axis
Demand schedule.A table that shows a range of prices for a certain good or service and the
quantity demanded at each price
Economic surplus.See social surplus
Equilibrium.The situation where quantity demanded is equal to the quantity supplied; the
combination of price and quantity where there is no economic pressure from surpluses or
shortages that would cause price or quantity to change
Equilibrium price.The price where quantity demanded is equal to quantity supplied
Equilibrium quantity.The quantity at which quantity demanded and quantity supplied are equal
for a certain price level
Excess demand.At the existing price, the quantity demanded exceeds the quantity supplied; also
called a shortage
Excess supply.At the existing price, quantity supplied exceeds the quantity demanded; also called
a surplus
Factors of production.The resources such as labor, materials, and machinery that are used to
produce goods and services; also called inputs
Inferior good.A good in which the quantity demanded falls as income rises, and in which
quantity demanded rises and income falls
Inputs.The resources such as labor, materials, and machinery that are used to produce goods and
services; also called factors of production
Law of demand.The common relationship that a higher price leads to a lower quantity demanded
of a certain good or service and a lower price leads to a higher quantity demanded, while all
other variables are held constant
Law of supply.The common relationship that a higher price leads to a greater quantity supplied
and a lower price leads to a lower quantity supplied, while all other variables are held constant
Normal good.A good in which the quantity demanded rises as income rises, and in which
quantity demanded falls as income falls
