Economics Test 2 Review Flashcards Preview

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Flashcards in Economics Test 2 Review Deck (56)
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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