Economics Unit 2 – Flashcards
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Elasticity of Demand
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a measure of how consumers react to a change in price
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Substitution Effect
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When consumers react to an increase in a good's price by consuming less of that good and more of other goods
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Law of Demand
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consumers buy more of a good when its price decreases and less when its price increases
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Complements
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Goods that are bought and used together
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Substitutes
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a good that replaces another demanded good
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Total Revenue
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the amount of money a company receives by selling goods or services
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Normal Good
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a good that consumers will demand more of when their incomes increase
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Demand Curve
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a graphic representation of the quantities of a good that will be bought at each price as shown on a demand schedule
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Income Effect
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the change in consumption resulting from a change in real income
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Elastic
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demand that is very sensitive to a change in price
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Inferior Good
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a good that consumers demand less of when their incomes increase
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Inelastic
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demand that is not very sensitive to a change in price
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Subsidy
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a government payment that supports a business or market
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Supply Schedule
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a chart that lists how much of a good a supplier will offer at various prices
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Excise Tax
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a payment to the government on the production or sale of a good
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Elasticity of Supply
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a measure of the way a quantity supplied reacts to a change in price
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Variable Cost
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a cost that rises or falls depending on how much is produced
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Law of Supply
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the tendency of suppliers to offer more of a good at a higher price
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Diminishing Marginal Returns
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a level of production in which the marginal product of labor decreases as the number of workers increases
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Marginal Product of Labor
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the change in output from hiring one additional unit of labor
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Increasing Marginal Returns
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a level of production in which the marginal production increases as the number of workers increases
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Regulation
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government intervention in a market that affects the production of a good
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Market Supply Curve
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a graph of the quantity supplied of a good by all suppliers at different prices
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Total Cost
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fixed costs plus variable costs
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Fixed Cost
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a cost that does not change, no matter how much is produced
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Quantity Supplied
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the amount a supplier is willing and able to supply at a certain price
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Demand
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the desire to own something and the ability to pay for it
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Quantity Demanded
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the amount of a product that consumers wish to purchase in some time period
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Purchasing Power
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the ability to purchase goods and services
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Diminishing Marginal Utility
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the utility gained(or lost) from an increase(or decrease) in the consumption of that good or service.
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Demand Schedule
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a table that lists the quantity of a good a person will but at each different price
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Determinant of Demand
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the determinants of individual demand of a particular good, service, or commodity refer to all the factors that determine the quantity demanded of an individual or household for the particular commodity
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Substitute Good
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goods used in place of each other
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Complementary Good
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two goods that are bought and used together
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Elastic Demand
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describes demand that is very sensitive to a change in price
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Inelastic Demand
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describes demand that is not very sensitive to a change in price
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Supply
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the amount of goods available
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Profit
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the financial gain mad in a transaction
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Cost of production
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the theory that price of an object or condition is determined by the sum of the cost of resources that went into making it. Cost can compose any factors of production.
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Supply Curve
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a graph of the quantity supplied of a good a different prices
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Elastic Supply
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a numerical measure of the responsiveness of the supply of a given good to a change in the price of that good
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Inelastic Supply
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a type of supply elasticity wherein a change in price produces a less than proportionate change in the quantity supplied
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Determinant of Supply
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elements besides price which determine the available amount of a product or service
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Tax
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a required payment to a local, state, or national government
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Total Product
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total amount produced by a firm during some time period
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Marginal Product
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the addition to total product following the employment of an extra unit of a variable factor
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Depreciation
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the loss of the value of capital equipment that results from normal wear and tear, or, a decrease in the value of a currency
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Marginal Costs
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the cost of producing one more unit of a good
