Glossary of Terms
- Complements – goods that go together and therefore when the price of good one increases (decreases), the demand for its complement decreases (increases).
- Demand – a term in economics that explains consumers’ wants and how they respond to price changes.
- Demand curve – a downward sloping curve that maps price against quantity demanded.
- Efficient (re: market equilibrium): efficiency regarding market equilibrium means that quantity supplied equals quantity demanded and that nobody in the market goes without, and that there is not waste.
- Endogenous factor – a change in price that causes a movement along either the demand or supply curve.
- Equilibrium – the point where D = S and quantity demanded equal quantity supplied.
- Exogenous factors – any factor that causes either the demand curve or the supply curve to shift. In the case of demand: income, population or number of consumers, tastes and preferences, related goods such as complements and substitutes, and expectations. In the case of supply, weather, changes in policy or taxes, the number of producers or entrants to the market, capacity, technology and expectations.
- Individual demand – demand for one person
- Individual supply – supply from one producer
- Market demand – demand from all consumers in the market
- Price – the amount that consumers pay to producers per product
- Price takers – a situation where no producer or consumer can influence prices in the market by producing or consuming large quantities of goods.
- Quantity demanded – the quantity measured on the x-axis (horizontal axis) for demand
- Quantity supplied – the quantity measured on the x-axis (horizontal axis) for supply
- Substitutes – goods that can replace each other
- Supply – the quantity of products or services produced by farmers, manufacturers, etc.
- Supply curve – an upward sloping curve that shows the positive relationship between price and quantity supplied.
- Theory of Demand – the theory of demand states that as prices rise (fall), consumers will demand less (more) goods and services.
- Theory of supply – the theory of supply states that as prices rise (fall), producers will make more (fewer/less) goods and services.
Kuo, Y., 2016. 3 great forces changing China’s consumer market. World Economic Forum, Monday 4, January 2016. Retrieved from: https://www.weforum.org/agenda/2016/01/3-great-forces-changing-chinas-consumer-market/
See Alberta Agriculture and Forestry, 2015. Agricultural Marketing Guide: how demand and supply determine market price. It can be accessed at: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis972
Future Trading Charts, no date. How supply and demand determine commodities market prices. Learning Center. Retrieved from: http://futures.tradingcharts.com/learning/supply_and_demand.html