Chapter 3-4 Flashcards Preview

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Flashcards in Chapter 3-4 Deck (33):
1

Chicken or beef

Substitute good

2

Satisfaction gained by one or more unit of input

Marginal good

3

A graphic representation of the law of demand

Demand curve

4

The act of buying

Demand

5

A shift of a demand curve

Change in demand

6

Travel on a city bus

Inferior good

7

Something that a person purchases more of his as income rises

Normal good

8

Which economist developed the principle of diminishing marginal utility

William Jevons

9

Which of the following is not one of the three functions of price?
A. To provide incentives
B. To transmit information
C. To increase utility
D. To redistribute income

C. To increase utility

10

The law of demand ______ of a good rises, other things being held constant, the _____will fall.

Price, quantity demanded

11

Which of the following will not cause a shift in the demand curve?
A. A change in the price of the good
B. A change in the income of buyers
C. A change in price expectations
D. A change in preferences

A. A change in the price of the good

12

Assume that you are going to dinner at a nice restaurant is a normal good. What will happen to your demand curve for this good if your income rises

It will shift to the right

13

Good purchased with another good often
(Ex. Peanut butter and jelly)

Complementary good

14

Goods that households may use in place of others

Substitute goods

15

Goods that experience an increase in demand because of an increase in consumers’ incomes

Normal goods

16

buyers are willing to demand more of a good or service at every price along the curve.

Increase in demand

17

To visualize the law of demand better, economists take the information from the demand schedule and put it into a line graph.

Demand curve

18

Whenever a change in price causes a change in the num- ber of items demanded

A change in quantity demanded

19

which states that people tend to receive less and less (diminishing) additional (marginal) satisfaction (utility) from any good or service as they obtain more and more of it during a specific period of time.

Principle of diminishing marginal utility

20

states that everything else being held constant, the lower the price charged for a good or service, the greater the quantity of it people will demand, and the higher the price, the lower the quantity they will demand.

Law of demand

21

holds that the higher the price buyers are willing to pay, other things being held constant, the greater the quantity of a product a firm will produce and that the lower the price consumers are willing to pay, the smaller the quantity the supplier will produce.

Law of supply

22

The criti- cal intersection point at which both parties agree

Market equilibrium point

23

The price at which this meeting of the minds occurs in

Market equilibrium price

24

an excess of unsold products

Surplus

25

a barrier intended to prevent the prices of those items from falling below the market price.

Price floor

26

Whenever various factors hold the price of a good lower than its market equilibrium price

Shortage

27

prevent prices from rising to the market equilibrium price

Price ceilings

28

shown in a rightward shift of the supply curve, demonstrates the willingness of business firms to produce more of their product at any given price.

Increase in supply

29

a situation in which suppliers produce less of their product at any given price.

Decrease in supply

30

Just as a demand curve may shift to the left or right, a supply curve may shift to reflect (

Changes in supply

31

Whenever a change in the price consumers are willing to pay causes a change in the number of goods produced and sold

Changes in quantity supplied

32

positively sloped, meaning that as the price consumers will pay rises, suppliers become willing to provide greater quantities and that as the price consumers will pay falls, suppliers tend to pro- duce fewer quantities.

Supply curve

33

is the amount of goods and services business firms are willing and able to provide at different prices.

Supply