Unit 2 Test Review Flashcards
To be included in demand a person must have the desire to own something and what else?
Ability to pay for it
What is a good that can be used in place of another good is called?
Substitute
What shift in demand would cause a consumer to purchase hamburgers rather than steak?
Income
What shift in demand would occur if a new promotional firm creates a successful new TV commercial?
Consumer Tastes & Advertising
What is it called when one good must be used with another good?
Compliment
What is it called when demand is very responsive to price changes?
Elastic
What is it called when demand is not very responsive to price changes?
Inelastic
Firms will produce _____ at high prices, because they want more _____.
More & Profits
New Firms will _____ the market to earn profits.
Enter
Prices are _____ to producers to produce more or less.
Signals
Low prices are signals to firms who will ____production or ____the market.
Decrease & Exit
Elasticity of Supply is determined by what variable?
Time
What cost is determined by the combination of fixed and variable costs?
Total Costs
What type of costs change like raw materials & hourly wages?
Variable Costs
What is the cost of producing one more unit of goods called?
Marginal Costs
Government uses these to discourage the sale of things like tobacco or gas.
Taxes
What will happen when the number of firms in an industry increases?
Supply will increase
What is it called when the government sets the maximum price that can be charged for a G or S?
Price Ceiling
What is it called when the government sets the minimum price that can be charged for a G or S?
Price Floor
Rent Controls is an example of what?
Price Ceiling
Without government interference, S & D will always move toward what?
Equilibrium
With government interference, S & D will always be in what?
Disequilibrium
What happens when there are too many goods and not enough demand?
Excess Supply (surplus)
What happens when there are not enough goods and too much demand?
Excess Demand (shortage)
Illegal drug sales and untaxed cigarettes are examples of this.
Black Market Activity
A ______ exits when barriers to entry prevent new firms from entering the market.
Monopoly
What is it called when monopolists charge different prices to different people
Price Discrimination
What type of market would price wars, collusion, and price fixing be associated with?
Oligopolies
How has the government attempted to regulate the market and especially monopolies?
Antitrust laws
Selling products below the cost of production is called ______.
Predatory Pricing
