Terms in this set (30)
Circular Flow Diagram
A diagram that shows the exchange of goods and services for money among businesses, households and the government.
The market in which households exchange money for goods and services.
The market in which households exchange the factors of production for money.
To make a trade possible.
Law of Supply
an increase in price results in an increase in quantity available in the market
Law of Demand
an increase in price results in a decrease in quantity desired in the market
Market Clearing price
Equilibrium, where supply and demand meet
a thing that motivates or encourages one to do something
Determinants of Demand
Taste, Substitute good price change, Complimentary good price change, Income, population, expectations
Determinants of Supply
Cost of resources, taxes, technology, subsidies, expectations, number of sellers
A restriction on price that is above the market clearing price. Creates a surplus.
A restriction on price that is below the market clearing price. Creates a shortage.
When supply is greater than demand. Price is higher than market clearing price.
When demand is greater than supply. Price is lower than market clearing price.
the lowest pay permitted by law
government control and regulation of the amounts charged for housing, a maximum price for housing
Increase in Demand
A shift of the demand curve to the right
Increase in Supply
A shift of the supply curve to the right
Decrease in Demand
A shift of the demand curve to the left
Decrease in Supply
A shift of the supply curve to the left
A change in demand that results in a change in the amount supplied at the new price
A change in price that results in a change in the amount demanded at the new price
A business with one owner and unlimited liability.
A business owned by stockholders, controlled by a board of directors, with limited liability and double taxation.
A business with several owners and unlimited liability, can specialize.
The only seller in a market.
The difference between the price of an item and the cost to produce it. Paid to entrepreneurs.
A few sellers in a market that have some control over price.
Many sellers in a market, focus on differentiation of goods and advertising.
Many sellers in a market that is easy to enter, sells goods that are homogenous at the market price.
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Sub-fields of Psychology