Fundamentals of Demand
This effect takes place when a consumer reacts to a rise in the price of one good by consuming less of that good and more of another good.
Substitution effect
The demand for these goods or services are not sensitive to price changes.
Inelastic
This is a cost that does not change no matter how much of a good is produced.
Fixed Cost
This is a minium price, set by a govermnet that must be paid for a good or service.
Price Floor
If you buy much less of a good after a small price increase your demand is
Elastic
What is demand?
The desire to own something and the ability to pay for it.
The cost of running a factory is referred to as this
Operating Cost
To find total cost a business would add these two items.
Fixed Cost and Variable Cost
This occurs when the quantity supplied is not equal to the quantity demanded in a market.
Disequilibrium
These are goods you would buy in smaller quantities or not at all if your income were to rise and you could afford something better.
Inferior Goods
What is the law of demand?
As prices go down? Quantity Demanded goes up.
As prices go up? Quantity Demanded goes down
This is a government payment that supports a business or market
Subsidy
This is the change in output from adding one additional worker.
Marginal Product of Labor
This is a maximum price for a good or service imposed by the government. Think essential goods like water
Price Ceiling.
These are two goods that are bought and used together.
Complements
This table shows the quantities demanded at various prices by all consumers in a market.
Market Demand Schedule
This is the government intervention in a market that affects the production of a good.
Regulation
This is the cost of adding one additional unit to production?
Marginal Cost
This is a tax on the production or sale of a good
Excise Tax
Rent Control is an example of what form of government regulation?
Price Ceiling
This is the change in consumption of goods as a result of changes in price.
Income Effect
This occurs when the addition of a unit of labor reduces total output.
Negative Marginal Return
To find profit you would subtract what two items?
Total Revenue-Total Cost
Disequilibrium creates what two problems?
Shortages and Surpluses
This is the additional income from selling one more unit of a good or service
Marginal Revenue