Economics Test 2 Review Flashcards Preview

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Flashcards in Economics Test 2 Review Deck (56):
0

Define demand

Desire to own something and the ability to pay for it

1

What is the law of demand

When the price is lower, consumers will buy more

2

What is the substitution effect

As prices rise, alternatives are found

3

What is the demand curve

Graph that shows demand based on price

4

What are the 4 factors leading to a change in demand

Population, income, consumer expectations, advertising

5

Elastic demand

Demand is very sensitive to a change in price

6

Inelastic demand

Demand not very sensitive to a change in price

7

Market share

Percent of the market you have

8

Supply

The amount of goods available

9

Law of supply

The higher the price, the more is produced

10

Supply curve

A graph that shows supply based on price

11

Fixed cost

Cost that doesn't change no matter how much is produced

12

Variable cost

Cost that rises or falls based on the quantity produced

13

Total cost

Fixed and variable costs together

14

Marginal cost

The additional cost of producing one more unit

15

Subsidy

Government payment that supports a business or market

16

Excise tax

Tax on a production or sale of a good

17

Is demand for gasoline elastic or Inelastic?

Inelastic

18

Elasticity of price increases with?

Change in price

19

Price ceiling

The maximum price a good can be

20

Price floor

The minimum price a good can be

21

Surplus

Quantity produced is more than que tofu demanded

22

Shortage

Quantity produced is less than quantity demanded

23

Supply shock

Sudden shortage of a good

24

Rationing

Allocating scarce goods and services without prices

25

Black market

Business without regard for government control

26

Adam smith

Author of the Wealth Of Nations

27

Spillover costs

Costs of production that affects people not involved. Ex) pollution

28

What are the 4 market structures

Monopoly, oligopoly, perfect competition, and monopolistic competition

29

Perfect competition

Large number of firms produce the same product

30

Commodity

Product that is the same no matter who produces it

31

Monopoly

Market dominated by a single seller

32

Natural monopoly

Market that runs better with one firm supplying the output

33

Patent

License that gives the inventor the exclusive right to sell it got a certain period of time

34

Franchise

Right to sell a good or service

35

License

Government issued right to sell a good or service

36

.Market power

Ability of a company to change prices and output

37

Equilibrium price/ equilibrium quantity

Where the two lines on a graph cross

38

Monopolistic competition

Many companies sell products that are similar

39

Differentiation

Making a product different than other similar products

40

Oligopoly

A few large firms dominate a market

41

Price fixing

Firms agree to charge one price for the same product

42

Cartel

Organization of producers that agree to a coordinate prices and production

43

Merger

The combination of 2 or more companies

44

Deregulation

Removal of same government controls of a market

45

Sole proprietorship

Business owned and operated by one person

46

What are three advantages of a sole proprietorship

Organization, profits, taxes

47

What are three disadvantages of a sole proprietorship?

Can get sued, limited funds, fragile business existence

48

Business license

License by the local/state government to own or operate a business

49

Zoning law

City law that separates areas for a business or a residency

50

Liability

Legally bound obligation to pay debts

51

Fringe benefit

Payment other than wages or salaries

52

Assets

Money or valuables belonging to a business

53

FDIC

Federal Deposit Insurance Corporation

54

Who are the owners of a corporation?

Stock holders

55

Who is elected by stockholders to make decisions?

Board of directors