Quiz #2 Vocab Flashcards
The law of _______
Producers supply a greater quantity at higher prices than at lower prices.
*price and quantity supplied are directly related
The law of supply
The law of ________
Consumers demand a greater quantity at lower prices than at higher prices.
*price and quantity demanded are inversely related
The law of demand
Government sets the maximum price for a good.
Set below equilibrium.
Causes shortages.
Price Ceiling
Government sets the lowest possible price for a good.
Set above equilibrium.
Causes surpluses.
Price floor
How much will supply or demand change when price changes
Elasticity
Medium of exchange
Measure of value
Store of value
These are functions of ______
Functions of money
A firm with one owner/operator
Has unlimited liability
Sole proprietorship
A firm with two or more owners/operators
Has unlimited liability
Partnership
A firm owned by shareholders
Owners (shareholders) have limited liability
Corporation
Act of firms selling final goods and services to customers
Product market
Act of households selling resources to firms
Factor market
Many sellers of identical products- no single firm can control the price
Ex: agricultural products
Perfect or pure competition
Many sellers but products are not identical.
Firms use product differentiation to monopolize part of the market.
Monopolistic competition
A few large firms control a market
They are highly interdependent
Ex: cereal, computers, tobacco
Oligopoly
A single firm controls a given market. Output is lower, price is higher than it should be.
Monopoly
