Unit Test 2 Flashcards
1
Q
Law of Demand
A
- as price increases, quantity demand goes down
2
Q
Substitutes
A
- two competing goods
3
Q
Complements
A
- two goods that are bought together
4
Q
Elasticity of Demand
A
- a measurement of how consumers react to a change in price
5
Q
Elastic
A
- responsive to price changes
- Qd changes more than prices
- Elasticity > 1
6
Q
Inelastic
A
- unresponsive to price changes
- Qd changes less than price
- Inelasticity < 1
7
Q
How to calculate Elasticity
A
- /(Qo-Q1/Qo)/(Po-P1/Po)/
8
Q
Normal Goods
A
- any product where as income increases demand increases
9
Q
Inferior Goods
A
- products where demand decreases as income increases
10
Q
Ceteris Paribus
A
- all else held constant
11
Q
What causes a shift in the demand curve
A
- population
- income
- popularity
- substitutes
- complements
- future price
12
Q
Supply
A
- a prediction of what quantity supplied will be at all prices
- (not ever a number)
13
Q
Law of Supply
A
- as Price Increases, Quantity increases
14
Q
Elasticity of Supply
A
- measurement of how producers react to a change in price
15
Q
Subsidy
A
- gov. payment to encourage production
16
Q
Excise Tax
A
- tax on sale or production of a good
17
Q
What causes a shift in the supply curve
A
- change in cost of inputs
- change in excise taxes
- change in subsidies
- technology
- # of suppliers
- future price
18
Q
Marginal Product of Labor
A
- change in output from hiring 1 more worker
19
Q
Specialization
A
- focusing labor on one task
20
Q
Equilibrium
A
- the point where quantity supplied = quantity demanded
21
Q
Price Ceiling
A
- max price
22
Q
Price Floor
A
- minimum price (minimum wage)
23
Q
Surplus
A
- excess supply
24
Q
Shortage
A
- excess demand
25
Oligopoly
- a small handful of firms control most of the output
26
Monopoly
- market structure dominated by a single seller
27
Nonprice Competition
- competing by changing some aspect of the product, such as quality, shape, branding, location, or service, but not changing price.
28
Perfect Competition
- market structure with many firms selling identical products
- little to no control over price
29
Natural Monopoly
- market that is most efficient with only one seller
30
Monopolistic Competition
- many firms selling similar, not identical products
| - firms have some market power
31
Demand
- the relationship between price and Qd
32
Quantity Demanded
- the amount of a product that all consumers would buy at one particular price
- (Qd is always a number)
33
Quantity Supplied
- amount of a product that sellers (firms) would be willing to sell at a given price
34
Diminishing Marginal Returns
- MPL is shrinking
35
Negative Marginal Returns
- MPL is negative
36
Marginal Revenue
- change in income from producing one more unit
37
Marginal Cost
- change in cost from producing one more unit
38
Role of Price
- determines how society allocates (distributes) resources
39
Collusion
- illegal agreement by firms to not compete
40
Regulation
- government rules limiting production (regulation)
