Chapter 7 Flashcards
any use of land, labor, or capital that produces goods and services more efficiently
technology
Ability of any good or service to satisfy consumer wants
utility
Economic law stating that as the price of a good rises the quantity demanded falls
Law of demand
Economic law stating that the satisfaction that a consumer gets from buying one more unit of a product will decrease with each additional unit bought
Law of diminishing marginal utility
Economic rule stating that people can not keep buying the same amount of a good or service it’s price rises while their income stays the same
Real income effect
Economic rule stating that, after some point, adding units of production increases output less than the previous input
Law of diminishing returns
One product often used with another product
Complementary good
Lime plotted on a graph that shows the quantities supplied of a good or service at each possible price
Supply curve
Economic concept dealing consumer responsiveness to change in the price of good or service
Elasticity
Economic principle stating that if two items satisfy the same need and the price of one increases, people will buy the other
substitution effect
economic law stating that as the price of a good rises the quantity supplied rises
law of supply
line plotted on a graph showing the quantity demanded of a good or service at each possible price
demand curve
occur when quantity demanded exceeds quantity supplied at the going price
shortages
situation in which the rise or fall in price of a product does not greatly affect the amount of that product people are willing to buy
in elastic demand
price of a product or service at which the amount producers are willing to sell is equal to the amount consumers willing to buy
equilibrium price
situation in which the rise or fall in price of a product greatly affects the amount of the product people are willing to buy
elastic demand
principle that is the basis market economy activity; a buyer and seller exercise their economic freedoms by working out their own terms of exchange
voluntary exchange
economic concept that deals with how much demand varies according to changes in price
price of elasticity of demand
situation occurring when supply is greater than demand
surplus
