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Terms in this set (22)
circular flow diagram
how does the flow of money and the flow of goods and services among businesses and households occur
households buy what firms produce in the product market. households give labor that firms pay for in the factor market
how is money a medium of exchange
because everyone has moeny and its easy to carry around
What is the relationship between price and quantity for the law of supply?
As price goes up, quantity goes up
What is the relationship between price and quantity for the law of demand?
As price increases, quantity decreases
What is the market clearing price?
The price that exists when a market is clear of shortage and surplus, or is in equilibrium.
How do buyers and sellers determine the market clearing price?
because if the buyers want more of something then the sellers will supply more of it!! therefore the equilibrium price will change as demand and supply changes
graph how D and S determine equilibrium price and Q
How do prices serve as an incentive in a market economy?
because it provides competition for the producers to have the highest profit
graph factors that cause changes in market supply and demand
How do price floors create surpluses?
This is due to the fact that a price floor can have the effect of consumers having to pay a higher price for a good or product. As a result of this effect, purchases drop drastically and a surplus of goods is created.
How do price ceilings create shortages?
For the price that the ceiling is set at, there is more demand than there is at the equilibrium price. There is also less supply than there is at the equilibrium price, thus there is more quantity demanded than quantity supplied.
What is the price elasticity of demand?
measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
What is the price elasticity of supply?
measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price or cost.
What is a sole proprietorship
A business owned and managed by a single individual
What is a partnership
A business organization owned by two or more persons who agree on a specific division of responsibilities and profits
What is a corporation
A legal entity owned by individual stockholders
how is profit an incentive for entrepreneurs?
because they will make money
What is a monopoly?
A market dominated by a single seller
What is an oligopoly
A market structure in which a few large firms dominate a market
What is monopolistic competition?
A market structure in which many companies sell products Thaf are similar but not identical
What is pure competition?
a market situation in which there exists a homogeneous product, freedom of entry, and a large number of buyers and sellers none of whom individually can affect price
This set is often in folders with...
Fundamentals Of Economics
personal finance economics
International Economics Review
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