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90 Cards in this Set

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  • Back
Demand
desire, ability, & willingness 2 buy a product
microeconomics
area of economics tht deals w behavior &decision making by small units such as individuals and firms
demand schedule
listing tht shows various quantities demanded of a particular product at all prices tht mght prevail n market at a given time
demand curve
grph shwing quantity demanded at each and evry price tht mght prevail in market
law of demand
quantity of a good or service demanded varies inversely w it's price
market demand curve
demand curve tht shws quantities demanded by evry1 who is interesetd n purchasing the product
marginal utility
extra usefulness or satisfaction a persons gets frm acquiring or usin 1 more unit of a product
diminishing marginal utility
xtra or additional satisfaction received frm using additional quantities of the product begins 2 diminish
change in quantity demanded
movement alng demand curve tht shws a chng n quantity of product purchased n response 2 a chng n price
income effect
chng n quantity demanded b/c of a chnge n price tht alters consumers' real income
substitution effect
chng n quantity demanded b/c of chng n relative price of product
change in demand
demand increases or decreases bc ppl r willing 2 buy diff. amounts of product at same price
substitutes
products used in place of other products
complements
related goods where the use of one increases the use of the other
elasticity
measure of responsiveness tht tells hw a dependent variable such as quantity responds 2 a chng n an independent varible such as price
demand elasticity
extent to which a chnge in price causes a chnge n quantity demanded
elastic
given chng in price causes a relatively larger chng n quantity demanded
inelastic
given chng n price causes a realtively smaller chng n quantity demanded
unit elastic
given chng n price causes a proportional chng n quantity demanded
supply
amount of a product tht wlf b offered for sale at all possible prices tht cld prevail n market
law of supply
principal tht suppliers will normally offer more for sale at hgh prices and less at lower prices
supply schedule
listing of vaious quantities of a particular product supplied at all possible prices n market
supply curve
graph shwing various quantities supplied at each and every price tht mght prevail n market
market supply curve
supply curve tht shws quantities offered at various prices by all firms tht offer product 4 sale n a givn market
quantity supplied
amount tht producers brng to market at any given price
change in quantity supplied
chng n amount offered for sale n response to a chnge n price
change in supply
situation where suppliers offer diff. amounts of products 4 sale at all possible products n market
subsidy
gov. payment 2 an invdividual, business, or othr grp 2 encourage or protect a certain type of economic activity
supply elasticity
measure of the way in which quantity supplied responds 2 a chng n price
theory of production
relationship between factors of production and the output of goods and services
short run
period of production tht allows producers to chng only the amountof varible input called labor
long run
period of production longenough for producers to adjust the quantities of all its resources, including captial
law of variable proportions
in shrt run, output will chng as 1 input is varied while the othrs are hld constant
production function
a concept tht describes relationship btwn chngs n output to diff amounts of a single input while othr inputs r hld constant
raw materials
unprocessed natural products used in production
total product
total output produced by a firm
marginal product
xtra output or chng n total product caused by the addition of one more unit of variable input
stages of production
increasing returns, diminshing returns, and negative returns
diminishing returns
stage where output increases at a diminishing rate as more units of a varible are added
fixed cost
cost tht a business incurs even if the plant is idle and output is zero
overhead
total fixed cost
variable cost
cost tht chngs when the business rate of operation or output chnges
total cost
sum of fixed and variable costs
marginal cost
xtra cost incurred when a business produces 1 additional unit of a product
e-commerce
electronic business or xchng conducted ovr internet
total revenue
# of units sold multiplied by average price per unit
marginal revenue
xtra revenue associated w production & sale of 1 additional unit of output
marginal analysis
type of cost-benefit decision makin tht compares the xtra benefits 2 xtra costs of an action
break-even point
total output ot total product the business need to sell in order to cover its total costs
profit-maximizing quantity of output
situation tht exists when marginal costs and marginal revenue are equal
price
monetary value of a product as established by supply and demand
rationing
system under which an agency such as government decides everyone's fair share
ration coupon
ticket or receipt tht entitles the holder 2 obtain a certain amount of a product
rebate
partial refund of the origional price of the product
economic model
set of assumptions and/or relationships tht can b listed n a tbl, illistrated w a graph, or even stated algebraically
market equilibrium
prices r relatively stable, and the quantity of goods and services is = 2 the quantity demanded
surplus
quantity supplied if greater thn the quantity demanded at a given price
shortage
quantity demanded is greater than the quantity supplied at a given price
equilibrium price
price tht "clears the market" by leaving neither a surplus nor a shortage at the end of the trading period
price ceiling
max legal price tht can b charged for a product
min. wage
lowest legal wage tht can b paid to most workers
price floor
lowest legal price tht can b paid for a good or service
target price
price floor for farm products
nonrecourse loan
loan tht carries neither a penalty nor further obligation to repay if not paid back
deficiency payment
check sent to producers tht makes up the differecne btwn actual market price and target price
laissez-faire
philosophy tht gov. shld not interfere w/ commerce or trade
market structure
nature and degree of competition among firms operating in the same industry
perfect competition
competition characterized by a large # of well-informed independent buyers and sellers who exchng identical products
imperfect competition
name given ti a market structure tht lacks 1 or more of the conditions of perfect competition
monopolistic competition
market structure tht has all conditions of perfect competiton except for identical products
product differentiation
real or imagined differences between competing products in the same industry
nonprice competition
use of advertisin, giveaways, or othr promotional campaigns 2 convince buyers tht the product is somehow bttr thn anthr brand.
oligopoly
a market structure in which a few very large sellers dominate the industry
collusion
formal agreement to set prices or to otherwise behave in a cooperative manner
price-fixing
agreeing to charge the same or similar prices for a product
monopoly
market structure with only one seller of a particular product
natural monopoly
market situation where sots r minimized by having a single firm produce a product
economies of scale
situation in which the average cost of production falls as the firm gets larger
geographic monopoly
a monopoly based on the absence of other sellers in a certain geographic area
technological monopoly
monopoly based on ownership or control of a manufacturing method, process, or other scientific advance
government monopoly
monopoly the government owns and operates.
market failure
event tht can occur w/ inadequate info, resource immobility, external economies, and public goods
externality
unintended side effect tht either benefits or harms 3rd party not involved n the activity tht caused it
negative externality
unwanted harm, cost, or inconvenience suffered by a 3rd party b/c of actions by othrs.
positive externality
benfit received by someone who had nothing to do with the activity that generated the benefit
public good
product thts collectively consumed by everyone, & whose use by 1 individual dsnt diminsh satisfaction or value received by othrs
trust
legally formed combo of corps. or companies
price discriminiation
practice of charging customers difference prices for the same product
cease and desist order
Federal trade Commission ruling requiring a company 2 stp an unfair business practice, such as price-fixing, tht reduces or limits competition amng firms
public disclosure
requirement tht businesses reveal info to the public