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chapter 4 and 5 voca
| Question | Answer |
|---|---|
| Demand | consumers are willing and able to buy a good or service |
| law of demand | increase in a goods price causes a decrease in the quantity demanded |
| purchasing power | the amount of money or income that people have available to spend on goods or services |
| income effect | any increase or decrease in consumer's purchasing power caused by change in price |
| substitution effect | the tendency of consumers to sustitute a similar, lowered price product for another product that is relatively more expensive |
| diminsihing marginal utility | as more units of a product are consumed, the satisfication recieved from consuming each additional unit declines |
| demand schedule | shows the relationship between the price of a good or service and the quantity that consumers demand |
| demand curve | plots the relationship between the price of a product and the quantity demanded |
| determinants of demand | A shift in either the D2 or D3 curve means that a different quantity of car stereos is demanded at each and every price |
| substitute goods | goods that can be used to replace the purchase of similar goods when prise rises |
| complementary goods | goods that are commonly used with other goods |
| Elasticity of demand | the degree to which changes in goods price affect the quantity demanded by consumers |
| law of supply | the principle that producers will supple more of a product or service at higher prices but less of a product or service at lower prices |
| profit motive | the desire to make money |
| cost of production | the total cost of materials, labor, and other inputs required in the manufacture of a product |
| supply curve | a graphic representation of a supply schedule, showing the relationship between the price of an item and the quantity supplied during a given time period, with all other things being equal |
| determinant of supply | a nonprice factor that influences the available supply of a good or service |
| tax | a required payment to a local, state, or national gov. usually made on some regular basis |
| law of deminishing returns | the priniciple that as more of one input (such as labor) is added to a fixed supply of other resources (such as capital), productivity will increase up to a point, after which the marginal product will diminish |
| overhead | the sum of a buisness's fixed costs except for wages and the material costs |
| variable costs | a cost of doing buisness that changes directly with a change in the level of output, typincally rising and dropping as production increases and decreases |
| marginal costs | the costs of producing one additional unit of output |
| market failure | a flaw in a price system that occurs when some costs have not been accounted for and therefore are not properly distributed |
| externality | an effect that an economic activity has on people and buisnesses that are niether producers nor consumers of the good or service being produced. Can either be positive or negative |
| public good | any good or service that is consumed by all members of a group, regardless of who has helped to pay for it |
| market equilibrium | the point at which the quantity supplied and quantity demanded for a product are equal at the same prices |
| surplus | a situation in which the quantity supplied of an item at a given price exceeds the quantity demanded |
| shortage | a situation in which the quantity demanded of a good or resource exceeds the quantity supplied |
| price ceiling | a gov. regulation that sets a max. price for a particular good |
| price floor | a gov regulation that sets a min. price for a particular good |
| minumun wage | the lowest hourly rate that an employer legally can pay a worker, as established by federal law |
| rationing | a system by which a gov. or other institution decides how to distribute a good or service; rationing is usually the result of limited supply |
Created by:
DanielleandJerry
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