economics :(

Created by lilyrom 

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20 terms · yea this just preety much the econmomnics..if u care

circular flow model

a simplified diagram of the economy, showing the product market(production flows from businesses to consumers and dollars flow in the opposite direction) and the factor market (households sell their factors to businesses in return for dollars).

product market

sales of consumer products; the final goods and services that are bought by households.

factor market

where businesses buy natural resources, labor, and capital needed to produce their goods and services.

demand

the willingness on the part of people to buy certain quantities of a product at different price levels.

law of demand

states that people will buy more of a product at a lower price than at a higher price, if nothing else changes.

demand schedule

a table that shows how many products people will buy at various prices.

demand curve

a graphic representation of a demand schedule. it generally slopes downward from left to right. this shows the lower price, the more people are likely to buy.

determinants of demand

the things that cause demand to change: for example, consumer taste, income, price of substitutes and complementary goods, and a change in number of potential customers.

substitute goods

a good that is interchangeable with another, such as butter and margerine

complementary goods

a good that is used with another good, such as a bow to its arrow.

supply

the quantity of goods and services that sellers will offer at various prices during a given time and place.

diminishing returns

at a certain level of production, the cost per unit of producing additional units increases. this occurs because when one factor of production increase but other factors are held constant, a point is reached where the additional inputs will add less production than preceding inputs.

law of supply

at higher prices producers are willing to offer more products for sale than at lower prices.

supply schedule

a table showing the relationship of price and the quantity sellers will offer in the market.

supply curve

a graph of a supply schedule, showing the relationship between price and quantity.

point of equilibrium

the intersection of the demand and supply curves, indicating the price and quantity at which a product will be sold in the market.

surplus

when the equilibrium price is above the intersection of supply and demand, a surplus remains. at that price the quantity demanded is less than the quantity supplied.

shortage

when the equilibrium price is below the offered price, a shortage develops. at that price, the quantity demanded is greater than the quantity supplied

price inelastic demand

people want the same amount no matter what the price. demand for necessities is inelastic.

price elastic demand

a change in price causes a change in the quantity sold. demand for luxuries is elastic

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