Chapter 4/5

Question 1

Market

Answer 1

Any place buyers and sellers meet to exchange goods and services

Question 2

Demand

Answer 2

Combo of quantities someone is willing to/able to buy over a range of prices at a given moment

Question 3

Law of demand

Answer 3

Rule saying that more will be demanded at lower prices and less at higher

Question 4

5 factors that influence demand of goods

Answer 4

1. Taste or preference of consumer
2. Income of the consumer
3. Changes in prices of related products
4. Advertisement expenditures
5. # of consumers in the market

Question 5

Supply

Answer 5

Amount fo a product or producer or seller would be willing to offer for sale at all possible prices

Question 6

Law of supply

Answer 6

Principle that more will be offered for sale at higher prices than lower

Question 7

5 factors that influence supply of goods

Answer 7

1. Price
2. Cost of production
3. Natural conditions
4. Technology
5. Gov policies

Question 8

Elasticity:

Answer 8

ability to change or adapt

Question 9

Elasticity of supply

Answer 9

Respensiveness of quantity supplied to a change in price

Question 10

2 types of supply elasticity

Answer 10

Elasticity supply: slight change in price will lead to a drastic change in demand
In elastic supply: when a change in price will have almost no effect on demand

Question 11

Incentive

Answer 11

something that motivates

Question 12

Subsidy

Answer 12

gov payment to encourage or protect a certain economic activity (food, gas, milk industries, etc) (best interest of the public)

Question 13

Fixed costs

Answer 13

costs of production that do not change when output changes

Question 14

Variable costs

Overhead

Answer 14

production costs that vary as output changes; sometimes called….
• overhead: a broad category of variable costs that include interest, rent, taxes, and executive salaries

Question 15

Total cost

Answer 15

the sum of variable costs plus fixed costs: all costs

Question 16

Marginal cost

Answer 16

the extra cost of producing one additional unit of production (additional equipment or factory

Question 17

Average revenue

Answer 17

average price that every unit of output sells for

Question 18

Total revenue

Answer 18

the total amount earned by a company from the sales of all of its products

Question 19

Marginal revenue

Answer 19

extra revenue from the sale of one additional unit or output

Question 20

Break even point

Answer 20

production level where the total cost equals total revenue

Question 21

Which of these best results from the repeal of an items susbidies

Answer 21

A leftward shirt of that items supply curve

Question 22

Which of these names the way in which producers regard taxes?

Answer 22

As part of the cost of production

Question 23

Which of these best describes the influence of high prices on the behavior of consumers

Answer 23

They are incentive for consumers to buy less

Question 24

Which of these is the best description of a normal supply curve

Answer 24

It’s slope goes up when the diagram is read from left to right

Question 25

Which of these is true of both an individual supply curve and a market supply curve

Answer 25

A change in quantity supplied takes place only when there is a change in price

Question 26

Why is the law of demand called a law

Answer 26

Because it has happened repeatedly

Question 27

Why is a demand curve downward sloping

Answer 27

Because it reflects the desire, ability, and willingness of the consumer

Question 28

Which is the best synonym for marginal

Answer 28

Additional

Question 29

When the price of something increases the quantity demanded

Answer 29

Decreases

Question 30

A demand schedule is best described as

Answer 30

Data

Question 31

As people use more and more of a product they encounter

Answer 31

Diminishing marginal utility

Question 32

The law of demand states that the quantity demanded of a product varies _______ with its price

Answer 32

Inversely