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Flashcards in Key Terms 1 Deck (24)
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1
Q

Elastic supply

A

Producers can increase output without a rise in cost or a time delay

2
Q

Inelastic supply

A

Producers find it hard to change production following a change in price in a given period of time

3
Q

PES formula

A

Percentage change in quantity demanded / Percentage change in price

4
Q

Cross elasticity of demand

A

Measures the responsiveness of demand for good X following a change in the price if a related good Y

5
Q

Close substitiues

A

Small rise in the price of good X causes a large rise in the demand for good Y

6
Q

Weak substitutes

A

A large rise in the price for good X cause a small rise in the demand for good Y

7
Q

Close complements

A

A small rise in the price of good X causes a large rise in the demand for good Y

8
Q

Weak complements

A

A large drop in the price of good X causes a small rise in the demand for good Y

9
Q

Unrelated products

A

Products where a change in price of one product does not affect the demand for the other product

10
Q

Supply

A

The quantity of a good or service that a producer is willing and able to supply in a given period of time

11
Q

The basic law of supply

A

As the price of a product rises, do businesses expand to supply that product

12
Q

Profit motive

A

When producers expand supply because a product becomes more profitable

13
Q

Demand

A

The quantity if a product sought by consumers in a given time period

14
Q

The price mechanism

A

Describes the means by which decisions taken by consumers and businesses interact to determine the allocation of scarce resources

15
Q

Price elasticity of supply

A

Measures the relationship between change in quantity supplied following a change in price

16
Q

Elastic supply

A

Producers can increase output without a rise in cost or a time delay

17
Q

Inelastic supply

A

Producers find it hard to change levels of production in a given time period

18
Q

PES (Formula)

A

Percentage change in quantity demanded/percentage change in price

19
Q

PES > 1

A

Supply is price elastic

20
Q

PES

A

Supply is price elastic

21
Q

PES = 0

A

Supply is perfectly inelastic

22
Q

PES = infinity

A

Supply is perfectly elastic

23
Q

Spare production capacity

A

When all of resources within production are not fully utilised

24
Q

Occupational mobility (production)

A

Refers to the ease with which producers can switch to producing another good