GLOSSARY. · Change in quantity demanded is a movement along a stationary demand curve caused by a change in price

· Change in quantity demanded is a movement along a stationary demand curve caused by a change in price. When any of the non-price determinants of demand changes, the demand curve responds by shifting.

· Change in quantity supplied is a movement along a stationary supply curve caused by a change in price. When any of the non-price determinants of supply changes, the supply curve responds by shifting.

· Complements are two goods for which an increase in the price of one leads to a decrease in the demand of the other.

· Elasticity is a measure of how much buyers and sellers respond to changes in market conditions.

· Equilibrium is the unique price and quantity established at the intersection of the supply and demand curves. Only at equilibrium does quantity demanded equal quantity supplied.

· Inferior good is a good for which, other things equal, an increase in income leads to a decrease in demand.

· Law of demand states there is an inverse relationship between the price and the quantity demanded, ceteris paribus.

· Law of supply states there is a direct relationship between the price and the quantity supplied, ceteris paribus. The market supply curve is the horizontal summation of individual supply curves.

· Law of supply and demand is the claim that the price of any good adjusts to bring the supply and demand for that good into balance.

· Non-price determinants of demand are as follows:

a. The number of buyers;

b. Tastes and preferences;

c. Income (normal and inferior goods);

d. Expectations of future price and income changes;

e. Prices of related goods (substitutes and complements).

· Non-price determinants of supply are as follows:

a. The number of sellers;

b. Technology;

c. Resource prices;

d. Taxes and subsidies;

e. Expectations of future price changes;

f. Prices of other goods.

· Normal good is a good for which, other things equal, an increase in income leads to an increase in demand.

· Quantity demanded is the amount of a good that buyers are willing and able to purchase.

· Quantity supplied is the amount of a good that sellers are willing and able to sell.

· Substitutes are two goods for which an increase in the price of one leads to an increase in the demand of the other.

· Surplus or shortage exists at any price where the quantity demanded and the quantity supplied is not equal. When the price of a good is greater than the equilibrium price, there is an excess quantity supplied, or surplus. When the price is less than the equilibrium price, there is an excess quantity demanded, or shortage.