Unit 3: Supply & Demand Study Blue Vocabulary

DEMAND The quantity of a good or service that consumers are willing and able to buy at various prices

SUPPLY The quantity of a good or service that producers are willing and able to offer for sale at various prices

CONSUMER A person who purchases goods and services for personal use

SUBSTITUTE GOODS A product that satisfies the same basic want as another product

COMPLEMENTARY GOODS A product that is used or consumed jointly with another product; tennis rackets and tennis balls are one example

LAW OF DIMINISHING MARGINAL UTILITY The general observation that as the quantity of a good or service consumed increases, the benefits for the consumer of each additional unit decrease

REVENUE The amount of money a firm receives in the course of doing business

PROFIT The money earned by a business after subtracting its operation costs

DEMAND SHIFTERS Factors other than price that can cause a change in demand for a good or service; examples include changes in consumer income or tastes

SUPPLY SHIFTERS Factors other than price that can cause a change in the supply of a good or service; examples include changes in technology and government policy

ELASTICITY A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price

COMPETITION Rivalry among sellers to achieve higher profits; usually leads to a decrease in price of the product and a greater variety of products

ENTREPRENEUR A person who assembles and organizes the resources necessary to produce goods and services