5-7

Question 1

Market Structure

Answer 1

the nature and degree of competition among firms operating in the same industry.

Question 2

Perfect Competition

Answer 2

a market structure in which a large number of firms all produce the same product

Question 3

Monopoly

Answer 3

a market in which there are many buyers but only one seller

Question 4

Oligopoly

Answer 4

a market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors

Question 5

Monopolistic Competition

Answer 5

a market structure in which many companies sell products that are similar but not identical

Question 6

Market Failure

Answer 6

a situation in which a market left on its own fails to allocate resources efficiently

Question 7

Externality

Answer 7

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume

Question 8

Public Goods

Answer 8

Goods; such as clean air and clean water; that everyone must share

Question 9

Market Equilibrium

Answer 9

the point at which the quantity of a product demanded by consumers in a market equals the quantity supplied by producers

Question 10

Equilibrium price

Answer 10

the price at which the quantity of a product demanded by consumers equals the quantity supplied by producers

Question 11

Equilibrium Quantity

Answer 11

the quantity of a good or service demanded by consumers and supplied by producers when the market is in equilibrium

Question 12

Price controls

Answer 12

government imposed limits on the prices that producers may charge in the market

Question 13

Price floor

Answer 13

a minimum price set by the government to prevent prices from going too low

Question 14

Price ceiling

Answer 14

a maximum price set by the government to prevent prices from going too high

Question 15

rationing

Answer 15

the controlled distribution of a limited supply of a good or service

Question 16

black market

Answer 16

an illegal market in which goods are traded at prices or in quantities higher than those set by the law

Question 17

demand

Answer 17

The quantity of a good or service that consumers are both willing and able to buy at various prices.

Question 18

law of demand

Answer 18

An economic law stating that as the price of a good or services increases; the quantity demanded decreases; and vise versa. Generally consumers are happier to buy goods and services at lower prices than at higher prices

Question 19

supply

Answer 19

The quantity of a good or services that producers are willing and able to offer for sale at various prices.

Question 20

law of supply

Answer 20

An economic law stating that as the price of a good or service increases; the quantity supplied increases; and vice versa. Generally; producers are happier to offer goods and services at higher prices than at lower prices

Question 21

revenue

Answer 21

The amount of money a firm receives in the course of doing business. Revenue is calculated by multiplying the quantity sold by the price.

Question 22

elasticity

Answer 22

A measure of the degree to which the quantity demanded or supplied of a good or service changes in response to a change in price.

Question 23

substitute good

Answer 23

A product that satisfies the same basic want as another product.

Question 24

complementary good

Answer 24

A product that is used or consumed jointly with another product.