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Economics Ch 7
Notes and vocabulary
| Question | Answer |
|---|---|
| The amount of a good or service that consumers are able and willing to buy at various possible prices during a specific time period | Demand |
| The amount of a good or service that producers are able and willing to sell at various prices during a specific time period | Supply |
| Freely chosen activity between buyers and sellers of goods and services. | Market |
| A transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange | Voluntary exchange |
| Economic rule stating that the quantity demanded and price move in opposite directions | Law of Demand |
| Amount of a good or service that a consumer is willing and able to purchase at a specific price | Quantity demanded |
| Economic rule stating that individuals cannot keep buying the same quantity of a product if it's price rises while their income stays the same. | Real income effect |
| Economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other. | Substitution effect |
| The ability of any good or service to satisfy consumer wants; amount of satisfaction one gets from a good or service. | Utility |
| An additional amount of satisfaction | Marginal utility |
| Economic rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased. | Law of Diminishing marginal utility |
| Table showing quantities demanded at different possible prices. | Demand schedule |
| Downward-sloping line that graphically shows the quantities demanded at each possible price. | Demand curve |
| A product often used with another product; as the price of the second product decreases, the demand for the first product increases. | Complementary good |
| Economic concept dealing with consumers responsiveness to an increase or decrease in price. | Elasticity |
| Economic concept that deals with how much demand varies according to changes in price. | Price elasticity of demand |
| Situation in which the rise or fall in a products price greatly affects the amount that people are willing to buy. | Elastic demand |
| Situation in which a products price change has little impact on the quantity demanded by consumers. | Inelastic demand |
| Economic rule stating that price and quantity supplied move in the same direction. | Law of supply |
| The amount of a good or service that a producer is willing and able to supply at a specific price. | Quantity supplied |
| Table showing quantities supplied at different possible prices. | Supply schedule |
| Upward-sloping line that graphically shows the quantities supplied at each possible price. | Supply curve |
| Advance in knowledge leading to new and improved goods and services and better ways of producing them. | Technology |
| Economic rule that says so more units of a factor of production are added to other factors of production total output continues to increase but at a diminishing rate. | Law of diminishing returns |
| The price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy | Equilibrium price |
| Situation in which the quantity demanded is greater than the quantity supplied. | Shortage |
| Situation in which the quantity supplied is greater than the quantity demanded. | Surplus |
| A legal maximum price that may be charged for a particular good or service. | Price ceiling |
| Distribution of goods and services based on something other than price. | Rationing |
| "Underground" or illegal market in which goods are traded at prices above their legal maximum prices or in which illegal goods are sold. | Black market |
| A legal minimum price below a good or service may not be sold. | Price floor |
Created by:
MelissaSueAnn
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