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Honors Economics > Unit 2: How Markets Work (Vocabulary) > Flashcards

Unit 2: How Markets Work (Vocabulary) Flashcards

(69 cards)

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1
Q

Circular Flow Diagram Definition

A

a diagram that depicts the flow of money, goods, services, and resources in an economy

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2
Q

Factor (Resource) Market Definition

A

markets that facilitate exchanges for factors of production; they are composed of land, labor, capital, and entrepreneurship

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3
Q

Product Markets Definition

A

markets that facilitate exchanges for goods and services

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4
Q

Demand Curve Definition

A

Curve that is created when plotted points on a demand graph are connected.

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5
Q

Demand Graph Definition

A

Displays the price on the vertical axis and the quantity demanded on the horizontal axis

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6
Q

Demand Schedule Definition

A

Displays information for price and quantity in a table.

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7
Q

Income Effect Definition

A

The amount that quantity demanded of a good or service changes due to changes in the purchasing power of the consumer.

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8
Q

Law of Demand Definition

A

As price increases, quantity demanded falls, or as price decreases, quantity demanded increases when all other factors remain the same

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9
Q

Perfectly Elastic Definition

A

When the quantity demanded of a good or service could be anything for a given price

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10
Q

Perfectly Inelastic Definition

A

When the quantity demanded of a good or service does not change when there are changes in price. Demand is not responsive to changes in price.

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11
Q

Price Elastic Definition

A

The percentage change in quantity demanded is greater than the percentage change in price. Demand is highly sensitive to changes in price.

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12
Q

Price Elasticity of Demand Definition

A

Measures the responsiveness of quantity demanded to changes in price.

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13
Q

Price Inelastic Definition

A

The percentage change in quantity demanded is less than the percentage change in price. Demand is less sensitive to changes in price.

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14
Q

Substitution Effect Definition

A

Explains how changes in price affect which goods or services a consumer buys.

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15
Q

Unit Elastic Definition

A

When the percentage change in quantity demanded is the same as the percentage change in price.

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16
Q

Ceteris Paribus Definition

A

Latin phrase translating to “all other things being equal”

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17
Q

Complement Good Definition

A

A good that is consumed along with another good.

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18
Q

Determinants Definition

A

factors that influence, limit, or define an economic decision or condition

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19
Q

Inferior Good Definition

A

Any good for which demand decreases when incomes increase.

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20
Q

Normal Good Definition

A

Any good for which demand increases when incomes increase.

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21
Q

Substitute Good Definition

A

A good that is consumed instead of another good.

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22
Q

Law of Supply Definition

A

As price increases, quantity supplied increases, or as price decreases, quantity supplied decreases when all other factors remain the same.

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23
Q

Perfectly Elastic (Supply) Definition

A

Quantity supplied could have any value at a given price.

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24
Q

Perfectly Inelastic (Supply) Definition

A

Quantity supplied is completely unresponsive to price.

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25
Price Elastic (Supply) Definition
When the percentage change in quantity supplied is greater than the percentage change in price. Supply is highly sensitive to changes in price.
26
Price Elasticity of Supply Definition
Measures the responsiveness of quantity supplied to a change in price.
27
Price Inelastic (Supply) Definition
When the percentage change in quantity supplied is less than the percentage change in price. Supply is less sensitive to changes in price.
28
Supply Curve Definition
Curve that is created when plotted points on a supply graph are connected.
29
Supply Graph Definition
Displays the price on the vertical axis and the quantity supplied on the horizontal axis.
30
Supply Schedule Definition
Displays information for price and quantity supplied in a table.
31
Unit Elastic (Supply) Definition
The percentage change in quantity supplied is the same as the percentage change in price. Quantity supplied is perfectly responsive to price.
32
Fixed Costs Definition
Business expenses that have a set cost and are not dependent on the level of goods or services being produced by the firm.
33
Marginal Cost Definition
The cost added by producing one additional unit of a good or service.
34
Marginal Product of Labor Definition
The change in level of output when additional labor is hired, while holding all other factors constant.
35
Marginal Revenue Definition
The revenue gained by producing one additional unit of a good or service.
36
Operating Costs Definition
The costs associated with running a business on a day-to-day basis.
37
Revenue Definition
The quantity of output multiplied by the price of each unit of output.
38
Variable Costs Definition
Costs that change based on the firm's level of output.
39
Input Cost Definition
Cost of anything used in the production of a good.
40
Substitute in Production Definition
Goods that require the same inputs as another good and can therefore be produced as an alternative.
41
Disequilibrium Definition
When quantity supplied and quantity demanded are not equal.
42
Market Equilibrium Definition
The market condition when quantity supplied is equal to quantity demanded.
43
Shortage Definition
When the quantity demanded is greater than the quantity supplied.
44
Surplus Definition
When the quantity supplied is greater than the quantity demanded.
45
Price Ceiling Definition
A maximum price that cannot be exceeded
46
Price Floor Definition
A minimum price that cannot be reduced
47
Binding Price Ceiling Definition
a type of price ceiling set below market equilibrium, thereby having an impact on the market
48
Nonbinding Price Ceiling Definition
a type of price ceiling set above equilibrium, thereby having no impact on the market
49
Binding Price Floor Definition
a type of price floor set above equilibrium, thereby having an impact on the market
50
Nonbinding Price Floor Definition
a type of price floor set below equilibrium, thereby having no impact on the market
51
Consumer Surplus Definition
the benefit that consumers enjoy when they pay less than the maximum price that they are willing and able to pay
52
Producer Surplus Definition
the benefit that producers enjoy when they sell products at a higher price than the minimum price they are willing to accept
53
Deadweight Loss Definition
a loss of economic efficiency due to sub-optimal outcomes
54
Price System Definition
organizes the economic activity within an economy and coordinates the decisions of consumers, producers, and owners of resources
55
Prices and Profit Incentive Definition
the means by which changes in price can influence producers to enter or leave markets in search of higher profits
56
Profit Definition
the financial gain or benefit from exchanges or investments within an economy
57
Spillover Effect Definition
the impact an unrelated economic event in one nation has on another nation
58
Barrier to Entry Definition
obstacles such as high fixed costs, licensing requirements, patents, and technology challenges that prevent new firms from easily entering producer markets
59
Monopolistic Competition Definition
a market structure with many competitive firms, no barriers to entry, and firms are able to differentiate themselves and their products or services to gain a larger market share and set the price of its product or service
60
Monopoly Definition
a market structure with only one seller, high barriers to entry that essentially block entry, and the single firm is able to determine the price of its product or service because it is unique, and there is no competition
61
Oligopoly Definition
a market structure where there are only a few sellers that represent a large share of the overall market, high barriers to entry, and firms are able to set their own price but use collusion
62
Perfect Competition
a market structure with many competitive firms, no barriers to entry, and firms are price takers with prices determined by the supply and demand in the market
63
Product Differentiation Definition
using marketing strategies or product features and characteristics to distinguish a product or service from others in the market
64
Antitrust Laws Definition
Laws created to promote fair competition among firms and to protect consumers from bad business practices, such as market allocation, bid rigging, price fixing, and monopolies.
65
Clayton Antitrust Act Definition
Adopted in 1914, the law prevented mergers between businesses that could limit competition. The act also gave people the right to sue businesses that violated these acts and obtain court orders to prevent these sorts of issues from reoccurring.
66
Federal Trade Commission Definition
U.S. government agency that was created to ban unfair methods of competition as well as unfair and deceptive acts or practices. The agency is aimed at protecting consumers and ensuring a fair and competitive market in the U.S.
67
Federal Trade Commission Act Definition
Adopted in 1914, the law led to the creation of the Federal Trade Commission. The act gave the United States the legal tools to regulate and prevent anticompetitive practices.
68
Natural Monopoly Definition
a market that runs most efficiently when one large firm provides all the output
69
Sherman Antitrust Act Definition
Implemented in 1890, the law prevented unreasonable contract combination or conspiracy in restraint of trade and monopolization, attempted monopolization or conspiracy, or combination to monopolize. The broader aim was to prevent control of a number of key industries from falling into the hands of a limited number of individuals.

Honors Economics (5 decks)

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