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Economics Midterm > Section 4 Ch. 4-7 > Flashcards

Section 4 Ch. 4-7 Flashcards

0
Q

the cheaper something is, the more of it we will buy

A

Law of demand

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1
Q

is the desire to own something and the ability to pay for it.

A

Demand

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2
Q

The law of demand is the result of two separate patterns of behavior that overlap

A

Substitution and income effect

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3
Q

takes place when a consumer reacts to a rise in the price of one good by consuming less of that good and more of a substitute good.

A

Substitution effect

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4
Q

occurs when the change in consumption results from a change in income.

A

Income effect

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5
Q

is a table that lists the quantity of a good that a person will purchase at each price in a market.

A

Demand schedule

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6
Q

is a table that lists the quantity of a good all consumers in a market will buy at each different price.

A

Market demand schedule

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7
Q

a graphic representation of a demand schedule.

A

Demand curve

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8
Q

a Latin phrase that means “all other things held constant”

A

Ceteris paribus

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9
Q

a good that consumers demand more of when their incomes increase.

A

Normal good

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10
Q

a good that consumers demand less of when their income increases.

A

Inferior good

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11
Q

two goods that are bought and used together.

A

Compliments

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12
Q

goods used in place of one another.

A

Substitutes

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13
Q

a measure of how consumers react to a change in price.

A

Elasticity of demand

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14
Q

not very sensitive to price change

A

Inelastic

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15
Q

sensitive to price change

A

Elastic

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16
Q

take the percentage change in the demand of a good, and divide this number by the percentage change in the price of the good.

A

Elasticity formula

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17
Q

describes demand whose elasticity is exactly equal to one.

A

Unitary elastic

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18
Q

the total amount of money a firm receives by selling goods or services.

A

Total revenue

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19
Q

Elastic demand comes from one or more of these factors:

A
  1. availability of substitute goods
  2. a limited budget that does not allow price changes
  3. the perception of the good as a luxury item
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20
Q

Supply: the amount of goods available.

A

Supply

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21
Q

the tendency of suppliers to offer more of a good at a higher price.

A

Law of supply

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22
Q

is used to described how much of a good is offered for sale.

A

Quantity supplied

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23
Q

shows the relationship between price and quantity supplied for a specific good.

A

Supply schedule

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24
Q

is all of the supply schedules of individual firms in a market.

A

Market supply schedule

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25
Q

is a measure of the way suppliers respond to a change in price.

A

Elasticity of supply

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26
Q

the change in output from hiring one additional unit of labor.

A

Marginal product of labor

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27
Q

is a level of production in which the marginal product of labor increases as the number of workers increase.

A

Increasing marginal returns

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28
Q

is a level of production in which the marginal product of labor decreases as the number of workers increases.

A

Diminishing marginal returns

29
Q

a cost that does change, no matter how much of a good is produced.

A

Fixed costs

30
Q

a cost that rises or falls depending on how much is produced

A

Variable costs

31
Q

is the total of the fixed and variable costs added together

A

Total costs

32
Q

The additional cost of producing one more unit

A

Marginal costs

33
Q

the cost of operating a facility.

A

Operating cost

34
Q

is a government payment that supports a business or market

A

Subsidy

35
Q

is a tax on the production or sale of a good.

A

Excise tax

36
Q

are interventions in a market that affects the production of a good.

A

Regulations

37
Q

is the point of balance between price and quantity.

A

Equilibrium

38
Q

occurs when quantity supplied is not equal to quantity demanded in a market.

A

Disequilibrium

39
Q

occurs when quantity demanded is more than quantity supplied.

A

Excess demand

40
Q

occurs when quantity supplied exceeds quantity demanded.

A

Excess supply

41
Q

when the quantity supplied is greater than the quantity demanded.

A

Surplus

42
Q

occurs when the quantity demanded is greater than the quantity supplied.

A

Shortage

43
Q

the costs consumers pay to find the good.

A

Search costs

44
Q

is a sudden shortage of a good.

A

Supply shock

45
Q

is when goods are allocated using criteria other than price

A

Rationing

46
Q

is a forum for illegal goods

A

Black market

47
Q

is a market structure in which a large number of firms all produce the same product.

A

Perfect competition

48
Q

Four Conditions for Perfect Competition

A
  1. Many buyers and sellers participate in the market.
  2. Sellers offer identical products.
  3. Buyers and sellers are well informed about products.
  4. Sellers are able to enter and exit the market freely.
49
Q

A product that is considered the same regardless of who makes or sells it

A

Commodity

50
Q

are factors that make it difficult for a new firm to enter a market.

A

Barriers to entry

51
Q

are expenses that a firm must pay before it can begin to produce and sell goods.

A

Start up costs

52
Q

forms when barriers prevent firms from entering a market that has a single supplier.

A

Monopoly

53
Q

factors that cause a producer’s average cost per unit to fall as output rises.

A

Economies of scale

54
Q

An industry that enjoys economies of scale can easily become a

A

Natural monopoly

55
Q

is a monopoly created by the government.

A

Government monopoly

56
Q

issued by the government may turn a market into a monopoly

A

Patent

57
Q

is a contract that gives a single firm rights to sell goods in an exclusive market

A

Franchise

58
Q

gives firms the right to operate a business.

A

License

59
Q

monopolist will charge different prices to different groups of consumers

A

Price discrimination

60
Q

For price discrimination to work, a market must meet three conditions:

A
  1. Some market power.
  2. Distinct customer groups.
  3. Difficult resale.
61
Q

is a market structure in which many companies sell products that are similar but not identical.

A

Monopolist competition

62
Q

enables a monopolistically competitive seller to profit from the differences between his or her products and competitors’ products.

A

Differentiation

63
Q

Nonprice Competition takes several forms:

A
  1. Physical characteristics.
  2. Location.
  3. Service label.
  4. Advertising, image, or status.
64
Q

describes a market dominated by a few large, profitable firms.

A

Oligopoly

65
Q

is when firms in an oligopoly agree to set prices and production.

A

Collusion

66
Q

is stronger than a collusive agreement.

A

Cartel

67
Q

selling a product below cost to drive out competition.

A

Predatory pricing

68
Q

are laws that encourage healthy competition in the market.

A

Antitrust laws

69
Q

means that the government no longer decides what role each company can play in a market and how much it can charge its customers.

A

Deregulations

Economics Midterm (7 decks)

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