Economics Flashcards
amount of a good or service that consumers are able and willing to buy at & various possible prices during a specified time period.
Demand
amount of a good or service that producers are able and willing to sell at various prices during a specified time period
Supply
process of freely exchanging goods and services between buyers and sellers
Market
transaction in which a buyer and a seller exercise their economic freedom by working out their own terms of exchange.
Voluntary exchange
As price goes up demand goes down
Law of demand
amount of a good or service that a consumer is willing and able to purchase at a specific price.
Quantity demand
economic rule stating that individuals cannot keep buying the same quantity of a product if its price rises while their income stays the same.
Real income effect
economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other.
Substitution effect
the ability of any good or service to satisfy consumer wants.
Utility
an additional amount of satisfaction.
Marginal utility
economic rule stating that the additional satisfaction a consumer gets from * purchasing one more unit of a product will lessen with each additional unit purchased.
law of diminishing marginal utility
table showing quantities that would be demanded at various prices
P Demand schedule
downward-sloping line that graphs the quantities demanded at each possible price.
Demand curve
for a product often used with another product; as the price of one product) i decreases, the demand for the other increases.
Complementary good
measures consumers’ responsiveness to an increase or decrease in price.
Elasticity
measures the amount that demand varies according to changes in price.
price elasticity of demand
the rise or fall in a product’s price greatly affects the amount that people are willing to buy
elastic demand
A product’s price change has little impact on the quantity demanded by consumers.
inelastic demand
economic rule that price and quantity supplied move in the same direction.
law of supply
the amount of a good or service that a producer will supply at a specific price.
quantity supplied
table showing quantities supplied at different possible prices.
supply schedule
any use of land, labor or capital that produces goods and services more efficiently.
Technology
economic rule that says as more units of production are added, total output increases at a diminishing rate.
law of diminishing returns
the price at which quantity demanded and quantity supplied Meet
equilibrium price
condition that occurs when quantity demanded is greater than quantity supplied.
Shortage
condition that occurs when quantity demanded is less than quantity supplied.
Surplus
A government set maximum price
Price ceiling
limiting distribution of items that are in short supply.
Rationing
an illegal market in which high prices are charged for items in short supply.”
Black market
government-set minimum price.
Price floor
