ECO CHAPTERS 4-6

53 terms by crazee104 

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demand

the desire to own something and the abilit to pay for it

law of demand

consumers buy more of a good when its price decreases and less when its price increases

subsitution effect

when consumers react to an increase in good's price by consuming less of that good and more of other good

income effect

the change in consumpition resulting from a change in real income

demand schedule

a table that lists the quantity of a good a person will buy at each different price

market economy schedule

a table that lists the quantity of a good all consumers in a market will buy at each different price

demand curve

a graphic representation of a demand schedule

ceteris paribus

a latin phrase that means "all other things held constant"

normal good

a good that consumers demand more of when their incomes increase

inferior good

a good that consumers demand less of when their incomes increase

complements

two goods that are bought and used together

subsitutes

goods used in place of one another

elasticity of demand

a measure of how consumers react to a change in price

inelastic

describes demand that is not very sensitive to a change in price

elastic

describes demand that is very sensitive to a change in price

unitary elastic

describes ddemand whose elasticity is exactly equal to 1

unitary elastic demand

a special case. when demadn is unitary elastic, an increase (or decrease) in price will be met by an equal percentage decrease ( or incerase) in quantity demanded. Elasticity of dmeand is exactly 1.

total revenue

the total amount of money a firm recieves by selling goods or services

supply

the amount of goods available

law of supply

tendency of suppliers to offer more of a good at a higher price

quantity supplied

the amount a supplier is willing and able to supply at certain price

supply chedule

a chart that lsits how much of a good a supplier will offer at different prices

variable

a factor that can change

market supply schedule

a chart that lists how much of a good all suppliers will offer at different prices

supply curve

a graph of the quantity supplied of a good at diffrerent prices

market supply curve

a graph of the quantity suplied of a good by all suppliers at different prices

elasticity of supply

a measure of the way quantity supplied reacts to a change in price

marginal product of labor

the change in outpit from hiring one additional unit of labor

increasing marginal returns

a level of production in which the marginal product of labor increases as the number of workers increases

diminishing marginal returns

a levl of production in which the marginal product of labor decreases as the number of workers increases

fixed cost

a cost that does not change, no matter how much of a good is produced

variable cost

a cost that does change

total cost

fixed costs plus variable costs

marginal cost

the cost of producing one more unit of a good

marginal revenue

the additional income from selling one more unit of a good; sometimes equal to price

operating cost

the cost of operating a facility, such as a store or factory

subsidy

a govt payment that supports business or market

excise tax

tax on production or sale of good

regulation

govt intervention in a market that affects the production of a good

equilibrium

the pouint at which quantity demanded and quantity supplied are equal

disequilibrium

describes any price or quantity not at equliibrium; when quantity supplied is not equal to quantity demanded in a market

excess demand

when quantity demanded is more than quantity supplied

excess supply

when quantity supplied is more than quantity demanded

price ceiling

max price that can be legally charged for good or service

price flo!

min price for good or service

rent control

price celing placed on rent

min wage

a min price that an employer can pay a worker for an hour of labor

surplus

situation in which quantityh supplied is greater than quanity demanded aka excess supply -_-

shortage

situation in which quantity demanded is greater than quantity supplied aslo known as excess demand

search costs

the financial and opportunity costs consumers pay wehn searching for a good or service

supply shock

sudden shortage of good

rationinig

system of allocating scarce goods and services using criteria other than price

blakc market

market in which goods are sold illegally

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