Unit 2 Study Guide Flashcards
Causes for changes in Quantity Demanded?
Price
Causes for changes in Demand?
Consumer income
Consumer tastes
Price of related goods
Expectations
Population
Technology
Determinants of Demand Elasticity
Availability of substitutes
If it is a need or want
Portion of income spent on it
Examples of Elastic demand
Gas from particular station
Coffee
Examples of Inelastic Demand
Gas in general
Insulin
Service of medical Doctors
Relationship between Marginal Utility and Demand.
The more good a consumer consumes, the less they are willing to pay because each additional unit decreases satisfaction.
Relationship between Price and Quantity Demanded.
As the price of a good increases, the quantity demanded decreases, which is called Law of Demand
Causes for changes in Supply?
Cost of resources
productivity
Technology
Taxes
Subsidies
Government regulations
Number of sellers
Expectations
Cause of Change in Quantity Supplied?
Price
4 Costs that affect a Business’s decisions?
Fixed
Variable
Total
Marginal
Variable Costs
Costs that varies like labor, energy, and raw materials
Fixed Costs
Costs that do not change like rent.
Why is the Production Function important?
It illustrates the changes of one variable in a brief period or in the short run
What are the stages of production?
Increasing, decreasing, and negative returns.
What is the difference between a Supply Curve and a Demand Curve?
A Supply curve shows the quantity sellers are willing to sell at different price, and the curve slopes upwards. A Demand Curve Shows the quantity consumers are willing to buy at different prices, and the curve slopes downwards.
Complements
Product that increases the use of other products; products related in such a way that an increase in the price of one reduces the demand for both.
Demand
A combination of quantities that someone would be willing and able to buy over a range of possible prices at a given moment.
Elastic
A change in an independent (price) variable results in a larger change in the dependent variable (quantity demanded decreases which or supplied)
Inelastic
Change in the independent variable causes a less than proportionate change in the dependent variable.
Law of Demand
Rule stating that more will be demanded at lower prices and less at higher prices
Marginal Utility
Additional satisfaction or usefulness obtained from acquiring or consuming one more unit of a product.
Microeconomics
Branch of economic theory that deals with behavior and decision making by small units. Such as individuals and firms.
Substitutes
Competing products that can be used in place of one another; products related in such a way that an increase in the price of one increases the demand for the other.
Unit Elastic
Change in the independent variable generates a proportionate change of the dependent variable.
Break-Even Point
Total cost equals total revenue
Diminishing Returns
Stage of production where output increase at a decreasing rate as more units of variable input are added.
Increasing Returns
Stage of production where output increase at an Increasing rate as more units of variable input are added.
Law of Supply
Principle that more will be offered for sale at higher prices than at lower prices.
Marginal Product
Extra output due to the addition of one more unit of input.
Negative Return
Stage of production where output is decreasing as more units of input are added
Production Function
Graphic portrayal showing how a change in the amount of a single variable input affects total output.
Supply
Amount of a product a producer or seller would be willing to offer for sale at all possible prices in a market at a given point in time.
