A buyer's market is an economic situation where the supply of goods or assets exceeds demand, giving buyers an upper hand in negotiations over sellers. This term is widely used in the real estate sector to describe conditions where property buyers have an abundance of choices and leverage to negotiate lower prices.
Understand the critical differences between a change in supply, which relates to factors affecting production, and a change in quantity supplied, which is a response to changes in market price.
A Clearing Market is a situation in which supply and demand reach equilibrium quickly, resulting in no excess supply or demand at the market price. Typically, this involves short-lived goods where suppliers are motivated to sell their inventories promptly without price constraints.
An explanation of market adjustments to changes in supply and demand, in which prices oscillate toward an equilibrium price, often forming a pattern resembling a spider web on a graph.
Competitive equilibrium refers to a market state where supply equals demand, resulting in an equilibrium price where no buyer or seller has an incentive to change their behavior.
Demand represents the economic expression of the desire and the ability to pay for goods and services. It is distinct from mere need or desire as it encapsulates the willingness to exchange value for varying amounts of goods or services, depending on the price asked.
A graphical depiction of the demand schedule. It illustrates the relationship between the price of a good or service and the quantity demanded, typically resulting in a downward sloping curve due to higher quantity demanded at lower prices.
An economic condition characterized by a significant decrease in business activity, falling prices, reduced purchasing power, excess supply over demand, rising unemployment, accumulating inventories, deflation, plant contraction, public fear, and caution.
Elasticity of supply and demand measures the responsiveness of quantity supplied or demanded to changes in price. These metrics are fundamental in understanding market dynamics and predicting how various factors influence the market.
Equilibrium refers to the status of a market in which there are no forces operating that would automatically set in motion changes in the quantity demanded or the price that currently prevails.
The equilibrium price is the price at which the quantity of goods producers wish to supply matches the quantity demanders want to purchase.
The equilibrium quantity is the amount of a good that will be produced and sold when the market for the good is in equilibrium, where demand equals supply.
Fixation refers to the process of setting the present or future price of a commodity based on market analyses and assessments of supply and demand.
A free and open market is a type of market where prices for goods and services are determined by the unrestricted interplay of supply and demand, as opposed to a controlled market where prices and supplies are regulated.
Free Enterprise refers to the economic system wherein businesses are allowed to operate with minimal government intervention, guided primarily by the forces of supply and demand.
A free market is an economic system characterized by minimal or no government intervention, where prices are determined by supply and demand dynamics. It's an environment where transactions between buyers and sellers are governed primarily by mutual consent without external pressures from monopolies, cartels, or collusive oligopolies.
A situation in which the supply of a good or service exceeds its demand at the current price, leading to an excess that cannot be sold.
Gold fixing refers to the daily determination of the price of gold by selected gold specialists and bank officials in London, Paris, and Zurich. The price is fixed at 10:30 A.M. and 3:30 P.M. London time every business day according to prevailing market forces of supply and demand.
Inelasticity refers to the characteristic of a good or service for which the quantity demanded or supplied is relatively unaffected by changes in price.
An economic principle that states the price of a good is determined by the relationship between its supply and demand in a free market. Adjustments in supply or demand lead to changes in price to reach market equilibrium.
A market economy is an economic system in which the production and prices of goods and services are determined by competition among privately owned businesses.
Market equilibrium is a situation in a market where the prevailing price causes producers to produce exactly the quantity demanded by consumers at that same price. A market in equilibrium will not experience changes in price or quantity produced.
Market failure occurs when the equalization of supply and demand fails to produce an efficient allocation of resources from a social viewpoint. Causes for market failure include external economies, incomplete or poorly enforced property rights, and monopolistic characteristics of suppliers.
Menu costs refer to the costs associated with changing prices, named after the expense that restaurants incur when they reprint menus following a price change. This concept is key to understanding price stickiness in economics.
The monopoly price is the price arrived at in a market where the supply is controlled by a monopoly, typically higher than the price that would prevail under competitive conditions.
The normal price refers to the price level that goods or services typically command in a market over the long term. It is a stable price expectation absent extraordinary market fluctuations like sudden shortages or surpluses.
Open-market rates refer to the interest rates on various debt instruments bought and sold in the open market, which are directly responsive to supply and demand. These rates differ from the discount rate set by the Federal Reserve Board.
Overproduction refers to the excessive production of goods beyond consumer demand, resulting in surplus inventory and potential financial losses for businesses.
Partial-equilibrium analysis is an approach in economic analysis that focuses only on the part of the economy affected by the factors being studied, isolating it from the rest of the economy to better understand impact.
Price elasticity is a measure of the responsiveness of the quantity demanded or supplied of a good to changes in its price. It helps businesses and economists understand the impact of price changes on supply and demand.
Price flexibility refers to the economic circumstance where prices are permitted to vary considerably in response to changes in supply and demand.
Private goods are objects or services that possess typical characteristics including excludability and rivalrous consumption. These goods are consumed by individuals, and the consumption by one person prevents others from consuming the same unit or gaining similar benefits.
A pure-market economy is an economic system in which the forces of supply and demand determine the production, distribution, and consumption of goods and services, with little to no government intervention.
Quantity demanded refers to the specific amount of a particular good that buyers are willing to purchase in the market at a given price level. It is a key concept in economics that helps in understanding the dynamics of supply and demand.
The amount of a good or service that will be brought to market at a given price. The schedule of quantities supplied at each market price defines the Aggregate Supply Curve.
A method for limiting the purchase or usage of an item when the quantity demanded exceeds the quantity available at a specific price. Common during crises, rationing ensures fair distribution of scarce resources.
Laws that govern the maximum rate that may be charged for space. Though popular among tenants, rent control can be economically detrimental to an area because it distorts the forces of supply and demand.
A proposition in 19th-century classical economics, asserting that supply creates its own demand, implying that whatever quantity is supplied will also be demanded. It is named after the 19th-century French economist J.B. Say.
The basic economic principle that most resources, goods, and services are available in limited quantities, requiring allocation based on willingness to pay the price set by supply and demand in a market economy.
An economic model that does not consider or allow for changes over time, and within which all variables are simultaneously solved. Economists use static analysis in supply and demand models for goods and services.
Substitutes are products or services that can be used in place of each other, fulfilling similar needs or functions. Substitutes play a crucial role in determining market dynamics and consumer choices.
Graphic representation of supply and demand schedules of a particular market showing the equilibrium point where the supply and demand curves intersect, determining the equilibrium price and quantity.
