Market Dynamics in Economics Quiz

Law stating that as the price of a good increases, the quantity demanded by consumers decreases.

Inflation reduces the purchasing power of money over time, meaning that the same amount of money buys fewer goods and services.

A state where the quantity of a good supplied equals the quantity demanded, resulting in stable prices.

Factors like income, price of related goods, tastes, and expectations can shift demand, but a change in the price of the good itself only causes a movement along the demand curve.

Perfect competition involves many small firms producing identical products with no market power to influence prices.

Demand is perfectly inelastic when consumers are willing to buy the same quantity regardless of price changes.

Monopolistic competition involves differentiated products where firms have some market power.

Measure of how much the quantity demanded of a good responds to a change in its price.

Antitrust laws aim to protect consumers and promote fair competition by preventing monopolistic practices and promoting market competition.

Oligopolies consist of a few large firms dominating a market, and their actions are often influenced by the decisions of their competitors.

The production possibility frontier illustrates the trade-off between producing different goods efficiently, highlighting the opportunity cost of choosing one over the other.

A Nash Equilibrium occurs when each player's strategy is optimal given the strategies of all other players, with no player having an incentive to deviate unilaterally.