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Economics Ch. 7
Economics Chapter 7
Question | Answer |
---|---|
Demand | The amount of goods and services that the consumers are able and willing to buy at a possible price. |
Supply | The amount of goods and services that producers are able and willing to sell at various prices. |
Voluntary exchange | A transaction in which a buyer and seller exercise their economic freedom by working out their own terms/ |
Law of demand | Economic rule stating that the quantity demand and price moved into opposite directions. |
Quantity demanded | The amount of goods or services that consumer is willing and able to purchase at a specific price. |
Real income effect | Economic rule stating individuals cannot keep buying the quantity of products if the price rises. |
Subsitution effect | Economic rule stating that if two items satisfy the same need and the price of one rises, people will buy more of others. |
Utility | The ability of any good or service that satisfies the consumers wants. |
Marginal utility | An additional amount of satisfaction. |
Law of diminishing marginal utility | Rules stating that the additional satisfaction gets from purchasing one more unit of a product will lessen with each additional unit. |
Demand schedule | Table showing qualities, demand at different possible prices. |
Demand curve | Downward sloping line that shows in graph form the quality demand at each possible price. |
Elasticity | Economic concept dealing with consumers responsiveness to an increase or decrease in the price of a product. |
Price elasticity of demand | Economic concept that deals with how much demand varies according to change in prices. |
Elastic demand | Situation in which a given rise of full in a products price greatly effects the amount that people are willing to buy. |
Law of supply | Economic rule stating that price and quantity supplied more in the same direction. |
Quantity supplied | Amount of a good or service that a producer is willing and able to supply at a specific price. |
Supply schedule | Table showing quantities supplied at different possible prices. |
Supply curve | Upward sloping line that shows in graphs form the quantities supplied at each possible price. |
Technology | The use of science to develop new products and new methods for producing and distributing goods and services. |
Law of diminishing returns | Economic rule that says as more units of a factor of production are added to other factors of production after some points total output continues to decrease. |
Equilibrium price | The price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy. |
Shortage | Situation in which the quantity demand is greater than the quantity supplied at the current price. |
Surplus | situation in which quantity supplied is greater than quantity demanded at current price. |
Price ceiling | A legal maximum price that may be charged for a particular good or service. |
Rationing | The distribution of goods and series based on something other than the price. |
Black Market | Underground or illegal market in which goods are traded at prices above their legal maximum price or in which illegal goods are sold. |
Price floor | A legal minimum price below which a good or service may not be sold. |