Econo 7
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45 terms
Terms | Definitions |
|---|---|
 supply | Amount of goods and services availabble *What a is willing to produce depending upon his costs,demand,and potential profits |
| law of supply | Producer will produce make of product for a higher price/profit than they will when price/profit for their product falls |
| supply schedule | Tabular recording of the number of units of a good or service supplied at various prices by producers |
| supply curve | Graphic representation of the supply schedule *Reflects how higher and lower prices have an effect on the supply of a good or service |
| market price | point at which goods and services are exchanged for money |
| equilibrium | point at which the amount of a product demanded by consumers equals the amount supplied by producer *All wants for a good or service by consumers are satisfied at equilibrium *market price at equilibrium is where producer makes his greatest profit |
| surplus | economic condition that occurs when producers supply more of a good (or service) than is demanded by consumers *(A surplus drives price down) |
| shortage | economic condition that occurs when consumers demand more of a good (or service) *(shortage drives prices up) |
| capacity | number of units of a product a factory can produce given its size,type of machinery, and number of workers |
| mechanization | substitution of capital goods (machines) for labor in the product in process |
| input | any resource that is used in the production process |
| productivity | a ratio of the amount of output per unit of input *measure of how efficiently people work *usually measured in "output per worker per hour" |
| technology | body of knowledge,skills,and where with - all that comprises the processes used in production *application of science to industry,agriculture, and commerce which increases productivity and efficiency |
| research and development | company programs designed to produce new or improved products and to reduce production costs |
| economics of scale | reduction of production costs per unit as plant size increases (up to a point) *savings that come from mass production |
| diminishing returns | stage of production where additional inputs produce successively smaller units of output |
| fixed costs | Constant costs which dont change with increases or decreases in production *Also called "overhead" |
| variable costs | production costs that vary with changes in the quantity of output and increases or decreases in business |
| total costs | The sum of fixed costs and variable costs *TC=FC+VC |
| demand | wants of a consumer at a particular time for a good or service |
| law of demand | All else being equal more items of any good or service will be sold at lower price than a higher price *As the price of a good falls a larger quantity will be brought *If price of good goes up, less of it will be sold |
| demand schedule | Tabular recording of the number of units of a good or service purchased at various prices |
| demand schedule ex | After wilson high school won the state 3-A (cost-$5.00/order 100t-shirts) |
| demand curve | Graphic representation of the demand schedule *Illustrates how higher and lower prices after the demand for a good or service |
| price | money value of a good or service *unit by which we measure relative scarcity *determined by the interaction of demand and supply |
| elasticity | shows how much a change in price affects the quantity demanded |
| elastic (demand) | demand condition where %change in quantity demand for a good or service is more than the % change in price *ER>1 *small change in price will have a relatively large change on quantity dmanded for a good or service |
| inelastic | demand condition where the % change in quantity demanded for a good or service is less than the % change in price *ER<1 *Change in price will have a relatively small affect on the quantity demanded for a good or service |
| Unitary elastic (demand) | demand condition where the % change in quantity demanded for a good or service is less than the % change in price *ER=1 *Illustrated by a 45 degree line on an economic demand model |
| perfectly elastic | demand condition where the change in quantity demanded varies from zero to infinity whenever there is a change in price *Illustrated by a vertical line on an economic demand model |
| perfectly inelastic (demand) | demand condition where there is absolutely no change in the quantity demanded for a good or service with a change in price *Illsturated by a vertical line on an economic demand model |
| utility | usefulness of a good or service *Amount of satisfaction one gets from a good or service |
| diminishing marginal utility | point where the last item consumed will be less satisfying than the one before *seeing a movie for a second or third time,last slice of pizza after hunger is gone,second soft drink after one's thirst has been satisfied etc. *real income- amount of goods and services a person can purchase with his income |
| average costs | Total costs divided by the number of units of a good or service produced *TC/#units=AC |
| revenue | money received from sales *money taken in by a business or government |
| total revenue | sum of recipts from all units of a good (or service) sold in a given time period(day,week,month,quater,year) *TR=PxQ |
| break-even profit | point where total revenue equals total cost *TR=TC |
| profit | economic condition that occurs when total revenue is greater than total cost *TR>TC |
| loss | economic condition that occurs when total revenue is less than total cost *TR<TC or TC>TR |
| marginal revenue | The addition to total revenue from the sale of an extra unit of output |
| marginal cost | the addition to total cost from the production of an extra unit of output |
| maximum profit level | point reached when marginal revenue equals marginal cost *MR=MC |
| short run | production period which is insufficient to adjust or change some factor inputs |
| long run | production period which is of sufficient length so all factor inputs can be adjusted or changed |
| business cycle | Periodic phases of change and fluctuation in an industrial economy which depicts business expansion and contraction *(business cycle model reflects economic expansions,peaks,contractions,and troughs) |
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