Vocab 2

Question 1

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

Answer 1

Demand

Question 2

consumers will buy more of a good when its price is lower and less when its price is bigger.

Answer 2

Law of Demand

Question 3

when comsumers react to an increase in a goods price by consuming less of that good and more of a substitute good

Answer 3

Substitution Effect

Question 4

the change in consumption that results when a price increases causes real income to decline

Answer 4

Income Effect

Question 5

latin phrase that means “all other things held constant”

Answer 5

Cetaris Paribus

Question 6

two goods that are brought and used together

Answer 6

Complements

Question 7

goods that are used in piece of one another

Answer 7

substitutes

Question 8

a measure of how consumers respond to price changes

Answer 8

Elasticity of Demand

Question 9

decribes demand that is very sensitive to a change in price

Answer 9

Elastic

Question 10

describes demand that is not very sensitive to price changes

Answer 10

Inelastic

Question 11

decribes demand whose elasticity is exactly equal to one

Answer 11

Unitary Elastic

Question 12

the amount of goods available

Answer 12

Supply

Question 13

producers offer more of a good as its price increases and less as it’s price falls

Answer 13

Law of Supply

Question 14

a measure of the way quantity supplies react to a change in price

Answer 14

Elasticity of Supply

Question 15

the change in output from hiring one additional unit of labor

Answer 15

Marginal Product Of Labor

Question 16

a level of production at which the marginal product of labor increases as the number of workers increase

Answer 16

Increasing Marginal Returns

Question 17

a level of production at which the marginal products of labor decreases as the number of workers increase

Answer 17

Diminishing Marginal Returns

Question 18

a government payment that supports a business or market

Answer 18

Subsidy

Question 19

a tax on the production or sale of a good

Answer 19

Excise Tax

Question 20

government intervention in a market that affects the production of a good

Answer 20

Regulation

Question 21

the point at which the demand isequalfor a product or service

Answer 21

Equilibrium

Question 22

any price or quantity not at equalibrium ; when quantity suppies is not equal to quantity demanded in a market.

Answer 22

Disequilibrium

Question 23

a situation in which consumers want more of a good or service than producers are willing to make available at a particular price.

Answer 23

Shortage

Question 24

when quantity supplied more that quantity demanded

Answer 24

Slurplus

Question 25

a maxium price that can legally be charged for a good or service

Answer 25

Price Ceiling

Question 26

a minimum price for a good or service

Answer 26

Price Floor

Question 27

the final and oppritunity costs that consumers pay when searching for a good or service

Answer 27

Search Costs

Question 28

a sudden shortage of a good

Answer 28

Supply Shock

Question 29

a system of allocating scarce goods and services using criteria other that price.

Answer 29

Rationing

Question 30

a market in which goods are said illegally, without regard for government controls on price or quantity.

Answer 30

Black Market