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40 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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Substitution Effect |
When consumers buying less of a certain good due to increased price.
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Income Effect |
The change in consumption resulting from a change in real income.
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Ceteris Paribus |
A Latin phrase that means “all other things held constant”.
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Elastic |
The demand that is very sensitive to a change in price.
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Inelastic |
The demand that is not very sensitive to a change in price.
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Supply |
The amount of goods available. |
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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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Excess Demand |
When quantity demanded is more than quantity supplied.
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Excess Supply |
When quantity supplied is more than quantity demanded.
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Price Floor |
A minimum price for a good or service.
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Price Ceiling |
A maximum price that can be legally charged for a good or service.
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Price Shock |
A change within an economy, despite occurring outside of it.
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Rationing |
A system of allocating scarce goods and services using criteria others than price.
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Perfect Competition |
A market structure in which a large number of firms all produce the same product.
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Economies of Scale |
Are factors that cause a producer’s average cost per unit to fall as output rises.
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Price Discrimination |
The division of customers into groups based on how much they will pay for a good.
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Market Power |
The ability of a company to change prices and output like a monopolist.
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Collusion |
An agreement among firms to divide the market, set prices, or limit production.
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Price Fixing |
An agreement among firms to charge once price for the same good.
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Deregulation |
The removal of some government controls over a market.
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Illustrate the Law of Demand |
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Illustrate a demand curve using a demand schedule |
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Examples of Normal and Inferior Goods |
Normal - Pizza Inferior - used Paperback Books |
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Causes of a shift in the Demand Curve |
Temperature - Hot weather increase Ice Cream, lowers Pizza |
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Examples of Complements and Substitutes |
Complement - Ski and Ski Boots Substitutes - Ski increased price, buy Snowboards |
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Calculate the Elasticity of Demand |
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Factors that affect Elasticity |
Supply - Small increase in price has a big effect on supply. |
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Illustrate the Law of Supply |
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Complete the Production Cost Chart |
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Examples of Government Regulation of Supply |
The U.S. imports carpets from India. An Increase in wages of Indian workers would Decrease the supply of carpets to the U.S. market. |
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Plot the Equilibrium Point of a curve |
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Identify the Determinants that create a change in price |
Technology Subsidies Taxes Regulation |
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The advantages of Price |
Incentive Signals Flexibility Free |
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Four Conditions for perfect competition |
1. Many buyers and sellers participate in the market. 2. Sellers offer identical products 3. Buyers and sellers are well informed about products 4. Sellers are able to enter and exit the market freely |
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Barriers of entry |
Any factor that makes it difficult for a new to enter a market |
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Monopoly Perfect Competition Monopolistic Competition Oligopoly |
Monopoly - A market dominated by a single seller Perfect Competition - A market structure in which a large number of firms all produce the same product Monopolistic Competition - A market structure in which many companies sell products that are similar but not identical Oligopoly - A market structure in which a few large firms dominate a market |
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Franchise Liscense |
Franchise - The right to sell a good or service within an exclusive market License - A government issued right to operate a business |
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Targeted Discounts |
Movie Theater tickets for students - teens go to movies often |
