Price determination in a competitive market

• Competitive markets: A market with large numbers of buyers and sellers, with low barriers to entry and exit.
• Competing supply: When resources can be used to produce one good OR another good, not both.
• Complementary goods: Goods in joint demand; these goods are often bought together, e.g. printers and ink cartridges.
• Effective demand: Desire for a good or service that is backed by the ability to pay for said good or service.
• Disequilibrium: Excess supply or demand in a market.
• Elasticity: The proportionate responsiveness of a second variable to a change in a first variable
• Composite demand: Demand for a multi-purpose good.
• Condition of demand: A determinant of demand other than the good's price, that sets the position of the good's demand curve.
• Condition of supply: A determinant of supply other than the good's price, that sets the position of the good's supply curve.
• Customer sovereignty: Consumers can collectively govern production in a market via exercising spending power. Strongest in perfectly competitive markets.
• Demand: The quantity of a good or service that a consumer is willing and able to buy at a given price, at a given time.
• Excess demand: When consumers want to buy more than producers are willing to sell; occurs below equilibrium price.
• Equilibrium price: The price where planned demand matches planned supply.
• Income elasticity of demand (YED): Measures the responsiveness of a good's demand to a change in the incomes of consumers.
• Joint supply: When one good is produced, another good is also produced from the same raw materials.
• Price elasticity of supply: Measures the responsiveness of a good's supply to a change in price.
• Substitute good: A good in competing demand; a good that can be used in place of another similar good.
• Producer sovereignty: Producers determine what is produced and the prices charged.
• Supply: The quantity of a good or service that a producer is willing and able to sell at a given price, at a given time
• Normal good: A good for which demand rises as incomes rise.
• Exchange: Trading objects of value, utilising media of exchange e.g. money.