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Microeconomics 1
| Question | Answer |
|---|---|
| Surplus | quantity supplied > quantity demanded |
| Quantity Demanded | amount of a good that buyers are willing and able to purchase |
| Shortage | quantity demanded > quantity supplied |
| Complements | two goods for which an increase in the price of one leads to a decrease in the demand for the other |
| Equilibrium | market price has reached the level where quantity supplied = quantity demanded |
| Demand Curve | a graph of the relationship between the price of a good and the quantity demanded |
| Equilibrium Price | the price that balances quantity supplied and quantity demanded |
| Equilibrium Quantity | the quantity supplied and the quantity demanded at the equilibrium price |
| Supply Curve | a graph of the relationship between the price of a good and the quantity supplied |
| Supply Schedule | a table that shows the relationship between the price of a good and the quantity supplied |
| Demand Schedule | a table that shows the relationship between the price of a good and the quantity demanded |
| Substitutes | two goods for which an increase in the price of one leads to an increase in the demand for the other |
| Quantity Supplied | the amount of a good that sellers are willing and able to sell |
| Law of Supply and Demand | the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance |
| Normal Good | a good for which, other things equal, an increase in income leads to an increase in demand |
| Inferior Good | a good for which, other things equal, an increase in income leads to a decrease in demand |
| Market | a group of buyers and sellers of a particular good or service |
| Law of Demand | the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises |
| Competitive Market | a market in which there are many buyers and many sellers so that each has negligible impact on the market price |
| Microeconomics | the study of how households and firms make decisions and how they interact in markets |
| Circular-flow Diagram | a visual model of the economy that shows how dollars flow through markets among households and firms |
| Positive Statements | claims that attempt to describe the world as it is |
| Production Possibilities Frontier | a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology |
| Normative Statements | claims that attempt to prescribe how the world should be |
| Imports | goods produced abroad and sold domestically |
| Comparative Advantage | the ability to produce a good at a lower opportunity cost than another producer |
| Absolute Advantage | the ability to produce a good using fewer inputs than another producer |
| Exports | goods produced domestically and sold abroad |
| Elasticity | a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants |
| Price Elasticity of Supply | (% change in price quantity supplied)/(% change in price) |
| Price Elasticity of Demand | (% change in quantity demanded) / (% change in price) |
| Cross-Price Elasticity of Demand | (% change in quantity demanded of 1st good)/(% change in price of 2nd good) |
| Total Revenue | (price of good) x (quantity sold) |
| Income Elasticity of Demand | (% change in quantity demanded)/(% change in income) |
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