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The quantity of a good or service that consumers are willing and able to purchase at different prices. Example: As the price of apples decreases, the quantity demanded by consumers increases.

The quantity of a good or service that producers are willing and able to sell at different prices. Example: As the price of corn increases, farmers are willing to supply more corn.

A measure of how much the quantity demanded or supplied of a good responds to a change in price. Example: Luxury cars have a high price elasticity of demand; a small increase in price can lead to a large drop in quantity demanded.

The satisfaction or pleasure one gets from consuming a good or service. Example: Drinking a cold beverage on a hot day provides utility.

The additional satisfaction gained from consuming one additional unit of a good or service. Example: The first slice of pizza provides more marginal utility than the fourth slice.

The principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period. Example: Each additional scoop of ice cream might bring less pleasure than the previous one.

The limit on the consumption bundles that a consumer can afford. Example: With a fixed income, buying a new phone may mean you can't afford a tablet.

The value of the next best alternative that is forgone as a result of making a decision. Example: Choosing to go to college means forgoing the wages one could have earned working full time.

A situation in which the quantity demanded of a good equals the quantity supplied at the prevailing market price. Example: When the amount of bread consumers want to buy is equal to the amount bakeries want to sell.

A market structure characterized by a large number of small firms, a homogenous product, and very easy entry and exit. Example: Agricultural markets where many farmers sell identical products.

A market structure where a single firm controls the entire market for a good or service with no close substitutes. Example: A utility company in a region without any other electricity providers.

A market structure with many firms selling products that are similar but not identical. Example: The restaurant industry where many establishments offer different types of food.

A market structure with a few large firms that have some control over pricing and high barriers to entry. Example: The auto industry, which is dominated by a few large car manufacturers.

The study of how people behave in strategic situations where an individual's success in making choices depends on the choices of others. Example: Two competing firms deciding whether to launch an advertising campaign.

The cost of producing one additional unit of a good. Example: The cost of one more unit of coffee might include the beans, water, and extra labor.

The additional income received from selling one more unit of a good or service. Example: If a bakery sells one more cake, the price of that cake represents its marginal revenue.

Costs that do not vary with the level of output. Example: Rent for a factory, which must be paid regardless of how much is produced.

Costs that change with the level of output. Example: Costs for raw materials that increase as more units are manufactured.

The sum of fixed and variable costs for a given level of production. Example: If a business's fixed costs are $1000 and variable costs are$500 for 100 units, the total cost is $1500.$

Total cost divided by the quantity of output. Example: If the total cost for 100 units is $1500, the average total cost per unit is$15.

The cost advantages that a business achieves due to expansion. Example: A car manufacturer reducing the average cost per vehicle as output increases.

The disadvantageous rise in average costs as a firm grows beyond a certain size. Example: A company becoming less efficient as management becomes stretched and communication becomes cumbersome.

A market for the factors of production, such as labor, capital, land, and entrepreneurship. Example: A job marketplace where businesses hire employees.

The difference between the total amount consumers are willing to pay and the total amount they actually pay. Example: Willing to pay $10 for a burger but buying it on sale for$7 gives a consumer surplus of $3.$

The difference between the total amount producers are willing to accept and the total amount they actually receive. Example: Ready to sell a widget for $5 but receiving$7 gives a producer surplus of $2.$

A measure of how much the demand for a good changes in response to changes in income. Example: Demand for luxury cars might increase more than proportionally as people's incomes rise.

A measure of how much the demand for one good changes in response to a change in the price of another good. Example: As the price of butter increases, the demand for margarine might also increase.

A legal minimum on the price at which a good can be sold. Example: Minimum wage laws set a price floor for labor, ensuring workers are paid at least a certain hourly rate.

A legal maximum on the price at which a good can be sold. Example: Rent control sets a price ceiling on apartments in some cities, limiting the rent landlords can charge.

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable. Example: Taxes imposed on a good creating a gap between the consumer's price and the producer's price.