Supply
According to the Law of Supply, when the price of a good increases, what happens to the quantity supplied or demand?
Its supply increases and/or the demand goes down
The fundamental economic problem of having unlimited human wants in a world of limited resources.
What is scarcity?
A business owned and operated by a single individual, which is the most common form of business organization in the US.
What is a sole proprietorship?
According to the Law of Demand, as the price of a good goes down, the quantity demanded does this.
What is increases?
The point at which the quantity supplied equals the quantity demanded in a market.
What is equilibrium (or market equilibrium)?
This term refers to the total amount of a specific good or service that is available to consumers on the market.
What is supply?
The most desirable alternative given up as the result of a decision.
What is opportunity cost?
form of business organization recognized by law as a separate legal entity having all the rights of an individual, including the ability to issue stock.
What is a corporation?
Two goods for which an increase in the price of one leads to an increase in the demand for the other (e.g., butter and margarine).
What are substitutes?
A situation in which quantity supplied is greater than quantity demanded, often occurring when prices are set above equilibrium.
What is a surplus?
A government payment to a business or individual that encourages or protects a certain type of economic activity, often shifting the supply curve to the right.
What is a subsidy?
Decision-making that involves comparing the additional benefits of an activity against the additional costs incurred by that same activity.
What is marginal analysis (or marginal cost vs. marginal benefit)?
A business jointly owned by two or more persons who share the responsibilities, profits, and liabilities.
What is a partnership?
Two goods that are usually used together, where a price drop in one causes an increase in demand for the other (e.g., hot dogs and hot dog buns).
What are complements?
Costs that do not change when the rate of operation or production changes, such as rent or insurance payments.
What are fixed costs?
If the cost of raw materials used to make a product goes up, this is what happens to the overall supply curve.
What is a shift to the left (or a decrease)?
A visual diagram or model that shows the maximum combination of two goods or services an economy can produce when all resources are fully employed.
What is a Production Possibilities Curve (or Frontier / PPC)?
This major legal disadvantage of sole proprietorships and general partnerships means owners are personally responsible for all business debts.
What is unlimited liability?
The principle stating that as a consumer consumes more units of a good, the extra satisfaction gained from each additional unit decreases.
What is the Law of Diminishing Marginal Utility?
Production costs that change when total output changes, such as raw materials and hourly wages.
What are variable costs?
measure of how much the quantity supplied of a good responds to a change in the price of that good.
What is Price Elasticity of Supply?
The term for a financial or non-financial reward/punishment that motivates individuals or businesses to make specific economic choices.
What is an incentive?
A combination of two or more firms involved in different stages of producing or delivering a single good or service (e.g., an auto producer buying a tire company).
What is a vertical merger?
A type of good for which demand decreases when consumer income rises (e.g., generic brands vs. name brands).
What is an inferior good?
The stage of production where output increases at a decreasing rate as more variable inputs (like workers) are added to a fixed input (like a factory).
What is the Law of Diminishing Returns?