Economics Unit 2

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

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