terms

Question 1

subjective value

Answer 1

the value changes from person to person

Question 2

diminishing marginal utility

Answer 2

more of a product, lower satisfaction (cookies)

Question 3

example marginal utility schedule

Answer 3

cookie, satisfaction, sat. before cookie, sat. cookie brought table

Question 4

prices

Answer 4

cost of something to someone

Question 5

chart for how demand works

Answer 5

1. consumers ask for product
2. stores order product
3. wholesalers ship out orders to manufactures
4. manufacture increases production and requests resources
5. producers receive orders
6. producers hire new help and buy more tools
7. cycle repeats itself until demand is satisfied

Question 6

the law of demand

Answer 6

lower price, higher demand
“the lower the price, the greater the quantity demanded”

Question 7

demand schedule (chart)

Answer 7

tabular model that lists various quantities demanded at various prices

Question 8

demand curve (graph)

Answer 8

tabular model that lists various quantities demanded at various prices but as a graph :)

Question 9

change in demand

Answer 9

directly affects the price
- causes a shift in a graph :)

Question 10

4 conditions that may cause change in demand other than price of product or service

Answer 10

change in:
- income
- price of related goods
- people’s taste and preferences
- people’s expectations

Question 11

normal goods

Answer 11

goods that experience an increase in demand because of an increase in income

Question 12

inferior goods

Answer 12

experience a decline in demand when people’s income increases

Question 13

substitute goods

Answer 13

goods that households use in place of another good

Question 14

complementary goods

Answer 14

goods usually purchased together

Question 15

fad items

Answer 15

trend/filler items
appears quickly and then vanishes

Question 16

supply

Answer 16

the amount of goods and services businesses are willing and able to provide at different rates

Question 17

the law of supply

Answer 17

the higher the price, the greater the amount of product a supplier will provide

Question 18

supply schedule (chart)

Answer 18

table/chart that says how many goods can be produced for each price

Question 19

supply curve (graph)

Answer 19

graph of a supply schedule

Question 20

3 factors that cause changes in supply

Answer 20

1. technology
2. production cost
3. change in price of related goods

Question 21

market equilibrium point

Answer 21

where supply and demand match each other at the sweet spot

Question 22

surplus

Answer 22

excess/extra goods/services
- a surplus of services is “too many cooks in the kitchen”

Question 23

price floor

Answer 23

bottom price a company to go to regarding pricing

Question 24

3 solutions for a continued surplus

Answer 24

1. sell to government
2. get rid of labor (lay people off)
3. stopping/slowing production

Question 25

shortage

Answer 25

lack of goods/services

Question 26

price ceiling

Answer 26

government will put a max on company's pricing

Question 27

3 possible solutions for continued shortage

Answer 27

1. buy low, cheaper goods 2. hire more people 3. increase production