Chapter 4, 5,6 Test Flashcards
demand
desire to have some good or service and the ability to pay for it.
law of demand
when price of a good or service falls, consumers buy more of it
demand schedule
show how much of a good or service an individual is willing and able to purchase at each price in a market
market demand schedule
shows how much of a good or service all consumers are willing and able to buy at each price in a market
demand
graph that shows how much of a good or service an individual will buy at each price
market demand curve
shows the quantity that all consumers or the market as a whole are willing and able to buy at each price
law of diminishing marginal utility
the marginal benefit from using each additional unit of a good or service during a given time period tends to decline as each is used
income effect
a change in the amount of a product that a consumer will buy because the purchasing power of his or her income changes.
substitution effect
the pattern of behavior that occurs when consumer react to a change in the price of a good or service by buying a substitute product
change in quantity demand
a change in the amount of a product that consumers will buy because of a change in price
change in demand
occurs when a change in the marketplace such as high unemployment prompts consumers to buy different amounts of a good or service et every price
normal goods
goods that consumers demand more of when their incomes rise.
Inferior goods
goods that consumers demand less of when their incomes rise.
substitutes
goods and service that can be used in place of other goods and services to satisfy consumer’s wants
complements
when the use of one product increases the use of another product
elasticity of demand
used to describe how responsive consumers are to price changes in the marketplace
Elastic
when a change in price, either up or down, leads to a relatively larger change in the quantity demanded
Inelastic
when a price leads to a relatively smaller change in the quantity demanded
unit elastic
when the percentage change in price and quantity demanded are the same
Total Revenue
the amount of money a company receives for selling its products
Total Revenue Test
measured by comparing the total revenue a business would receive when offering its product at various prices.
Supply
the willingness and ability of producers to offer goods and services for sale
law of supply
producers are willing to sell more of a good or service at a higher price than a lower price
supply schedule
table that shows how much of a good or service an individual producer is willing and able to offer for sale at each price in a market
market supply schedule
a table that shows how much of a good or service all producers in a market are willing and able to offer for sale at each price
supply curve
graph that shows how much of a good or service an individual producer is willing and able to offer for sale at each price
market supply curve
shows the data from the market supply schedule
marginal product
change in total product that results from hiring one or more worker
specialization
Having each worker focus on a particular facet of production
increasing returns
each new worker adds more to total output than the last, as shown by the marginal product
diminishing returns
each new worker causes total output to grow but at a decreasing rate
fixed costs
expenses that the owners of a business must incur whether they produce nothing, a little, or a lot
Variable Costs
business costs that vary as the level of production output changes
total cost
found by adding fixed and variable costs together
marginal costs
the additional cost of producing one more unit of their product
marginal revenue
money made from each additional unit sold
total revenue
income a business receives from selling a product
profit-maximizing output
when marginal cost and marginal revenue are equal
