19 terms

Chapter 9 The Economics of Supply and Demand

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Terms in this set (...)

Bait and switch
a product that is advertised at a great price is ''out of stock'' when customers want to purchase it, and the salesperson then tries to sell customers a higher-priced alternative
Business cycle
the ups and downs of the economy; also called the economic cycle
Equilibrium
the point where the supply and demand curves intersect
Inflation
prices for goods and services rise faster than consumer income
Law of demand
inverse relationship between the price of a product and consumer demand for it—when the price goes up demand goes down, and when the price goes down demand goes up
Law of supply
inverse relationship between the price of a product and the producer's supply of it—when the price goes up the supply produced goes up, and when the price goes down the supply produced goes down.
Loss-leader pricing
the willingness to take a loss on the reduced prices of selected items in order to create more customer traffic
Markup
the amount that is added to the cost of an item for sale to cover operating expenses and allow for a profit
Multiple-unit pricing
customers receive a financial benefit for buying the larger quantity
Operating expenses
all the costs associated with running your business
Price discrimination
one individual, group, or business is charged a higher price than others purchasing the same product or service
Price fixing
related businesses conspire to charge high prices
Price lines
distinct categories of merchandise based upon price, quality, and features
Rebates
coupons on products that customers can mail in for a refund
Recovery
period of the business cycle that occurs when the economy shows signs of improvement
Scarcity
limited resources available to use in the production of products and events
Shoulder periods
periods of moderate demand
Special event promotion
associates a special sale with a major event, such as Thanksgiving or March Madness
Trade-in allowance
customers receive a discount for trading-in old merchandise when making a new purchase