Chapter 4/5 Flashcards
Market
Any place buyers and sellers meet to exchange goods and services
Demand
Combo of quantities someone is willing to/able to buy over a range of prices at a given moment
Law of demand
Rule saying that more will be demanded at lower prices and less at higher
5 factors that influence demand of goods
- Taste or preference of consumer
- Income of the consumer
- Changes in prices of related products
- Advertisement expenditures
- # of consumers in the market
Supply
Amount fo a product or producer or seller would be willing to offer for sale at all possible prices
Law of supply
Principle that more will be offered for sale at higher prices than lower
5 factors that influence supply of goods
- Price
- Cost of production
- Natural conditions
- Technology
- Gov policies
Elasticity:
ability to change or adapt
Elasticity of supply
Respensiveness of quantity supplied to a change in price
2 types of supply elasticity
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
Incentive
something that motivates
Subsidy
gov payment to encourage or protect a certain economic activity (food, gas, milk industries, etc) (best interest of the public)
Fixed costs
costs of production that do not change when output changes
Variable costs
Overhead
production costs that vary as output changes; sometimes called….
• overhead: a broad category of variable costs that include interest, rent, taxes, and executive salaries
Total cost
the sum of variable costs plus fixed costs: all costs
Marginal cost
the extra cost of producing one additional unit of production (additional equipment or factory
Average revenue
average price that every unit of output sells for
Total revenue
the total amount earned by a company from the sales of all of its products
Marginal revenue
extra revenue from the sale of one additional unit or output
Break even point
production level where the total cost equals total revenue
Which of these best results from the repeal of an items susbidies
A leftward shirt of that items supply curve
Which of these names the way in which producers regard taxes?
As part of the cost of production
Which of these best describes the influence of high prices on the behavior of consumers
They are incentive for consumers to buy less
Which of these is the best description of a normal supply curve
It’s slope goes up when the diagram is read from left to right
Which of these is true of both an individual supply curve and a market supply curve
A change in quantity supplied takes place only when there is a change in price
Why is the law of demand called a law
Because it has happened repeatedly
Why is a demand curve downward sloping
Because it reflects the desire, ability, and willingness of the consumer
Which is the best synonym for marginal
Additional
When the price of something increases the quantity demanded
Decreases
A demand schedule is best described as
Data
As people use more and more of a product they encounter
Diminishing marginal utility
The law of demand states that the quantity demanded of a product varies _______ with its price
Inversely
