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30 Cards in this Set
- Front
- Back
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Demand |
The desire to own something and the ability to pay for it.
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Law of Demand |
Says that when a good's price is lower,
consumers will buy more of it. When the price is higher, consumers will buy less of it. |
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Substitution Effect |
When consumers react to an increase in a good's price by consuming less of that good and more of other goods.
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Demand Schedule |
A table that lists the quantity of a good that a person will buy at each different price.
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Normal Good |
A good for which the demand increases as
income rises and decreases as income falls. |
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Inferior Good |
A good for which the demand increases as
income falls and decreases as income rises. |
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Complements |
Two goods that are bought and used together.
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Substitutes |
Goods used in place of one another.
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Elasticity of Demand |
A measure of how consumers react to a change in price.
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Inelastic |
Describes demand that is not very sensitive to a change in price. (Necessary goods)
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Elastic |
Describes demand that is very sensitive to a change in price.
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Total Revenue |
The total amount of money a firm receives by selling goods or services. |
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Supply |
The amount of goods available.
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Law of Supply |
Tendency of suppliers to offer more of a good at a higher price. |
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Quantity Supplied |
The amount of a good or service a supplier is willing, and able, to supply at a certain price. |
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Supply Schedule |
A chart that lists how much of a good a supplier will offer at different prices. |
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Elasticity of Supply |
A measure of the way quantity supplied reacts to a change in price.
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Subsidy |
A government payment that supports a business or market.
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Excise Tax |
A tax on the production or sale of a good. |
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Regulation |
Government intervention in a market that affects the production of a good. |
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Equilibrium |
The point of balance between price and quantity. (Demand = Supply) |
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Disequilibrium |
When the quantity of a good supplied does not meet demand. |
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Excess Demand |
When consumers demand more of a good than can be supplied. |
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Excess Supply |
When the quantity supplied is greater than the quantity demanded. |
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Price Ceiling |
The maximum price that can be legally charged for a good. |
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Price Floor |
The minimum price for a good or service that can be offered. |
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Rent Control |
A price ceiling (maximum amount of money) that can be charged for rent. |
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Minimum Wage |
The minimum price that an employer can pay a worker for an hour of labor. |
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Surplus |
When quantity supplied is greater than quantity demanded there are left over products. |
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Shortage |
When quantity demanded is less than quantity supplied. (When you don't have enough of the product needed.) |
