economics

Question 1

the branch of economics that studies the economy of consumers or households or individual firms

Answer 1

microeconomics

Question 2

Most important function of money: facilitates exchange of goods or services

Answer 2

medium of exchange

Question 3

something that keeps its value if it is stored rather than spent

Answer 3

store of value

Question 4

a means for comparing the values of goods and services; comparing a $35 jacket at 1store; a $30 jacket at another

Answer 4

unit of account

Question 5

a model that shows how households and firms circulate resources, goods, and incomes through the economy

Answer 5

circular flow of goods and services

Question 6

The movement of goods and services in the economy

Answer 6

flow of money

Question 7

Groups of individuals living together and sharing income

Answer 7

households

Question 8

the market in which households purchase the goods and services that firms produce

Answer 8

product market

Question 9

market in which firms purchase the factors of production from households

Answer 9

factor market

Question 10

the principle that suppliers will normally offer more for sale at higher prices and less at lower prices

Answer 10

law of supply

Question 11

All other things being equal, consumers buy more of a good when price decreases; less when price increases

Answer 11

law of demand

Question 12

a measure of how consumers react to a change in price

Answer 12

elasticity of demand

Question 13

A measure of the way quantity supplied reacts to a change in price

Answer 13

elasticity of supply

Question 14

a change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right

Answer 14

change in demand

Question 15

a movement along the demand curve that occurs in response to a change in price

Answer 15

change in wuantity demanded

Question 16

A change in the quantity supplied of a good or service at every price; a shift of the supply curve to the left or right.

Answer 16

change in supply

Question 17

A movement along the supply curve that occurs in response to a change in price

Answer 17

change in quantity supplied

Question 18

Products or services that can be used in place of each other. When the price of one falls, the demand for the other product falls; conversely, when the price of one product rises, the demand for the other product rises.

Answer 18

substitute goods

Question 19

when consumers react to an increase in a good’s price by consuming less of that good and more of a substitute good

Answer 19

substitution effect

Question 20

The change in the quantity demanded of a good that results from the effect of a change in the good’s price on consumers’ purchasing power

Answer 20

income effect

Question 21

the price at which the amount supplied is equal to the amount demanded

Answer 21

equilibrium price

Question 22

maximum price set below equilibrium price, causes shortage, may cause illegal markets to form

Answer 22

price ceilings

Question 23

establishes minimum prices that buyer must pay for a given good or service

Answer 23

price floors

Question 24

Factors that motivate and influence the behavior of individuals and organizations–Ex. profit motive, ownership of prive property and prices are economic incentives in a market economy.

Answer 24

economic incentives

Question 25

Rational decision making involves marginal benefits that equal or exceed the marginal costs

Answer 25

marginal cost analysis

Question 26

a market structure in which many companies sell products that are similar but not identical

Answer 26

monopolistic competition

Question 27

a market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market

Answer 27

perfectly competitive market

Question 28

A measure of how responsive demand for a product is to changes in price

Answer 28

price elsticity