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AP Eco CHPT 4-7

*sigh*

TermDefinition
Change in Demand change in QUANTITY that ppl plan to buy WHEN any INFLUENCE (other than price) CHANGES
Change in Quantity Demanded Change in quantity if good that ppl plan to buy that results from a change in the price of good w/ all other influences on buying plans remain the same
Change in Quantity Suplied Change in quantity of a good that suppliers plan to sell that results from change in price of good
Change in Supply Change in QUANTITY that suppliers plan to sell when any influence on selling plans other than the price of good changes
Complement A good that's CONSUMED w/ another good
Complement in Production Good that's PRODUCED along w/ another good
Demand Relationship between QD & Price of good when ALL other influences on buying plans remain the same
Demand Curve Graph of relationship between QD of a good & its price when all other influences on buying plans remain the same
Demand Schedule List of QD @ each different price when all other influences on buying plans remain the same
Equilibrium Price QD=Quantity Supplied
Equilibrium Quantity Quantity bought/Sold @ equilibrium price
Inferior Good Demand decreases when income increases & demand increases when income decreases
Law of Demand Other things remaining the same, if price of goodrises, the QD of good increases; IF price of good falls, QD increases
Law of Market Forces When there's surplus, price FALLS; shortage = price rises
Law of Supply Other things remaining the same, price of good increases = quantity supplied increases WHen price of good decreases = Quantity supplied decreases
Market Equilibrium QD=Quantity supplied Buyers&Sellers plans are in balance
Normal Good Good where demand increases when income increases & demand decreases when income decreases
QD Amnt. of good, service, or resource that ppl are WILLING and ABLE to buy during a specific time
Quantity Supplied Amnt of good, service, or resource ppl are WILLING and ABLE to SELL during specified period at a SPECIFIED price
Substitute Good that can be consumed in place of another good
Substitute in Production Good can be produced in place of other good
Supply Relationship between QSupplied and price of good when all other influences on selling plans remain the same
Supply Curve GRAPHS relationship between QSupplied & its price when all other influences on selling plans remain the same
Supply Scheduale List of QSupplied at each diff. price when all other influences on selling plans remain the same
Cross ELasticity of demand measure of responsiveness of demand for good 2 change in price of substitute or complement when other things remain the same
Elastic Demand When %age change in QD exceeds %age change in price
Elastic Supply When %age change in QSupplied = %age change in price
Income Elasticity of Demand Measure of responsiveness of demand or a good to change in income when other things remain the same
Inelastic Demand % change in QD < % change in price
Inelastic Suply % change in QSuplied < % change in price
Perfectly Elastic Demand QD changes by LARGE %age in response to an almost 0% change in price
Perfectly Elastic Supply QSupplied changes by LARGE %age in response to an almost 0% change in price
Perfectly Inelastic Demand % change in QD is 0 for any percentage change in price
Perfectly Inelastic Supply % change in QSupplied is 0 for any percentage change in price
Price Elasticity of Demand Measure of responsiveness of QD of good to change in its price when all other influences on buyers plans remain the same.
Price Elasticity of Supply Measure of responsiveness of QSupplied of good to change in its price when all other influences on buyers plans remain the same.
Total revenue Amnt. spent on a good & received by its seller & = price of a good multiplied by QSold
Total Revenue Test Method if estimating price elasticity of demand by observing change in total revenue that results from a price change
Unit Elastic Demand % change in QD = % change in price
UNit Elastic Supply % change in QSupplied = % change in price
Command System System that allocates resources by the order of someone in authority
Production possibility frontier Boundary between combos of goods/services that can be produced & combos that cannot be produced, given the state of factors and tech available
Allocative Efficiency Situation which quantities of goods/services produced are those that ppl VALUE MOST HIGHLY- Not possible 2 produce more of a good/service w/out giving up some of another good that ppl VALUE MORE HIGHLY
Consumer SURplus marginal benifit from good/service exces of price paid for it, summed over quantity consummed
Producer Surplus Price of good in EXCESS of marginal cost of producing it, summed over quantity produced
Total Surplus Sum of producer surplus and consumer surlpus
Market FAilure Inefficient market outcome
Deadweight Loss Decrease in total surplus that results from inefficient underproduction or overproduction
Transaction Costs Opportunity costs of making trades in a market
BIG tradeoff Tradeoff between efficiency and fairness that recognizes cost of making income trasfers
Price Ceiling/Price Cap GOVT. regulation that places UPPER limit at which good/service of production may be traded
Rent Ceiling Regulation that makes it ILLEGAL to charge more than a specified rent for housing
Black Market Illegal market that operates alongside a govt. regulated market
Search Activity Time spent looking for someone with whom to do business
Price Floor GOVT REGULATION that places a LOWER LIMIT on price in which a particular good/service of production may be traded
Minimum wage law GOVT regulation that makes hiring labor services for less than a specified wage Illegal
Price Support Price floor in ag. market maintained by GOVT gaurantee to buy any surplus ouotput at that price
Subsidy Payment by GOVT. to a producer to cover part of cost of production
Created by: odettelira