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74 Cards in this Set

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The willingness on the part of people to buy certain quantities of a product at different price levels.
Demand
The things that cause demand to change;for example, consumer taste, income, price of substitutes and complemenatary goods, and a change in the number of potential customers.
Determinants of Demand
States that people will buy more of a product at lower prices than a higher price, if nothing else changes.
Law of demand
At higher price producers are willing to offer more product for sale at lower prices.
Law of Supply
The intersection of the demand and supply curves, indication the price and quantity at which a product will be sold in the market.
Point of Equilibrium
When equilibrium price is below the offered price, a shortage develops. At that price, the quantity demanded is greater than the quantity supplied.
Shortage
The quantity of goods and services that sellers will offer at various prices during a given time and place.
Supply
When the equilibrium price is aboe the intersection of supply and demand, a surplus remains. At that price the quantity demanded is less that the quantity supplied.
Surplus
Tactics in which people tell you how the product has helped them.
Testimonial
Tactic in which a famous person tells you how the product has helped him or her.
Endorsement
A funny advertisement that gets you to remember a product.
Humor
Using coupons or bonuses to get you to use a product.
Giveway
Advertisement that suggests you will be more popular or attractive by using this product.
Popularity/Status
Occurs when a seller advertises one product at a very low price (bait) then tries to sell you a more expensive substitute good.
Bait and Switch
Advertisements that play off the emotions of potential buyers.
Psychology
The use of “little white lies” to sell a product.
Misleading Ads
Advertisement that suggests you will be more popular or attractive by using this product.
Bandwagon
Using everyday people to sell a product
Plain Folks
Using data to persuade someone to buy a product/service
Statistics
Overstating the
Glittering Generalities
Large number of companies, customers have no loyalty to one brand. Will buy cheapest, products of companies are identical, easy for a company to leave and join.
Perfect competition
Companies merge together that are different parts of the production process. (Gas station-gas distributor-refiner-oil refiner)
Vertical Consolidation
Companies merge together that make the same product. (Frito Lays and Sunchips)
Horizontal Consolidation
When a company breaks up into different parts of the production process. (Gas company starts to sell other products-food, drinks, etc.)
Diversification
Imperfect competition in which there are many firs selling similar products; the seller tries to make his/her product appear different from others
Monopolistic Competition
When a business increases the types of products it sells in order to lower its fixed costs and take advantage of less competitive market conditions.(Gas company starts to sell other products-food, drinks, etc.)
Diversification
An imperfect market in which a FEW firms dominate.
Oligopoly
When an industry requires such large capital investments that it would be inefficient to have more than one firm in that area.
Natual monopoly
Companies spread the cost of production out over more goods and services. Buy resources at lower prices.
Economies of Scale
The things that make a large firm more efficient than a small firm. As production increases, unit costs decrease; the larger the production, the more efficient the operation of the business.
Economies of Scale
Firms, Product Market, Households, Factor Market (Buyers and Sellers)
Circular Flow Model
What are two roles of labor in the economic system?
Part of production process and part of demand.
What is derived demand?
The demand for factors of production that results from the demand for a product or service. P. 176
What are dimininishing returns?
At a certain level of production, the cost per unit of producing additional units increases. This occurs because when one factor of production increases but other factors are held constant, a point is reached where the additional inputs will add less production than the preceeding inputs. P. 73, 177
What is diminishing marginal productivity?
At a certain point, adding another worker(or other factor of production) does not increase production as much as the preceeding additions of workers. P. 177
What is marginal physical product?
The amount of additonal product that is added to the total when an additional factor is added. (Such as a worker). P. 178
What is labor force participation rate?
The percentage of people, 16 years of age or older who could work, who are either working or looking for work. P. 179
What is equillibrium wage rate?
The wage level that will provide the same number of workers as jobs available. P. 179
What are money wages?
The number of dollars workers recieve for their labor(opposed to real wages). P. 180
If wages increase what will happen to the number of workers who want to work?
More workers will want to work.
What are some problems solved by working for a company that has a union?
Overtime, Safety, Compensation, Insurance, Raises, Vacation.
What is a labor union?
An organization of workers formed to give them greater bargaining power, that attempt to improve their wages and working conditions through collective action. P. 182
What is a craft union?
An organization of workers who have similar skills. (Horizontal union)
What is an industrial union?
A union in which all workers in an industry belong to the same union regardless of their job (vertical union. P. 183
Explain the National Labor Relations Act?
Legislation passed in 1935, which recognizes labor's right to bargain collectively as a union. P. 185
Explain the Taft-Hartley Act?
Legislation passed in 1947 that outlawed the closed shop, prohibited federal employees from striking, permitted president to seek an injunction delaying strikes that harm the national interest and permited state "right to work" laws.
Explain Right to Work laws.
State laws that make contracts requiring employees to join a union as a condition of work illegal. P. 186
What is union shop?
An agreement between labor and management that all workers must join the union after they have been hired to work.
What is an agency shop?
An arrangement in which all employees are required to pay union dues whether they join the union or not.
What is collective bargaining?
A method for reaching agreement on wages, hours, and conditons of work where representitives of workers and representitives of business discuss changes for all. P. 190
What is a slowdown?
An organized attempt by workers to slow down their production in order to put pressure on the company to meet workers' demands. P. 190
What is a boycott?
A group decision designed to put pressure on another group. Usually a union urging its members and others not to buy from an employer in order to make the employer come to terms. P. 190
Explain a sit-down strike?
When workers refuse to leave the plant which is being struck. P. 191
What is a strike?
When workers withhold their services in order to pressure management to yield to workers' demands. P. 191
Explain what picket lines are?
A union weapon in which striking workers walk in line carrying placards(signs) which express their grievances(complaints). P. 191
What is a union label?
A label sewn into garments, unions try to encourage the public to buy only products that wre manufactured by union workers. P. 191
Explain what a P.A.C.is and does? (Political Action Committee)
Groups that intend to put pressure on politicians to support their points of view. (Examples Gay rights, Abortion rights, Religious rights)
An injuction is a time of management weapon explain?
A court order to stop some kind of action. P. 185, 191
A lockout is a mangagement weapon, explain.
When management closes the work place to prevent unionized employees from working. P. 191
What/Who are strikebreakers?
Workers called in by a firm/company to replace workers who are out on strike. P 191
Explain how relocation is a management weapon.
A firm moves the plant to another place where wages, taxes or other costs may be lower, making greater profits.
Explain what a minimum wage is?
A law setting the lowest wage that may be paid to a worker. P. 193 Currently, $
What is a marginal worker?
Generally, workers who are hired last because they are least qualified. Usually such workers earn the minimum wage and have others means of support. P. 195
What are some ways a firm could react to higher minimum wages/
Accept smaller profit, increase prices to customers, pay no more than minimum wage, lay off some workers, purchase labor-saving machines, replace low-skill workers with higher skilled workers who are more productive, move, close down. P. 195
What is unemployment (rate)?
The percentage of those in the labor force who are not working but who are actively looking for work.
Explain Frictional Unemployment.
Short-term unemployment caused by workers changing jobs.
Explain Seasonal Unemployment.
Decline in employment due to seasonal conditions, such as lay-offs in outdoor construction in the North in winter. (p. 268)
Explain Cyclical Unemployment
Job layoffs coaused by a decline in business conditions. (p. 268)
Explain Structural unemployment
Loss of jobs for workers whose skills are no longer in demand; caused by changes in consumer tastes or in technology. The skills of workers looking for jobs do not match the skills employers are looking for.
What is inflation?
A general increase in the price level resulting from a decline in the value of money. (p. 272, 294)
What is the CPI? (Consumer Price Index)
The most commonly used measure of inflation.
What is demand-pull inflation?
When prices rise because there is a greater demand than there is a supply; too many dollars are chasing too few goods.
What is cost-push inflation?
An increase in prices caused by an increase in the cost of production, such as higher oil prices(p. 272)
What is poverty?
A relative term, defined by the U.S. government in 1991, as an income of less that $13, 924 for a family of four living in a city.