ECON 2010 Chapter : Exam 1 Ch Outline Study Guide
Document Summary
Perfectly competitive market- a market that meets the conditions of (1) many buyers and sellers (2) all firms selling identical products and (3) no barriers to new firms entering. Quantity demanded- the amount of a good or service that a consumer is willing and able to purchase at a given price. Demand curve- a curve that shows the relationship between the price of a product and the quantity of the product demanded. Law of demand- when the price of a product falls, the quantity demanded will increase, and vice versa. Substitution effect- the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes. Income effect- the change in quantity demanded of a good that results from the effect of a change in the goods price on consumers" purchasing power.