Supply and Demand
What happens to demand when the price of a normal good decreases?
Quantity demanded increases
Which market structure has many firms selling identical products?
Perfect competition
What is utility in economics?
Satisfaction from consuming a good or service
What does GDP measure?
The total value of goods and services produced in a country
What is a tax?
A required payment to the government
What is the point where supply and demand meet called?
Market equilibrium
What is a market with only one seller called?
Monopoly
What is marginal utility?
Additional satisfaction from consuming one more unit
What is inflation?
A general increase in prices in economy
What is a subsidy?
Financial support from the government
What happens if the market price is above equilibrium?
Surplus
Which market structure has a few large firms that dominate the market?
Oligopoly
What usually happens to marginal utility as consumption increases?
It decreases
What is unemployment?
When people who want to work cannot find jobs, and these people have to able to work
What is a price ceiling?
What is a price floor?
A maximum legal price
A minimum legal price
What happens to the demand curve if consumer income rises for a normal good?
The demand curve shifts right
What is product differentiation?
Making a product different from competitors’ products
What is total cost made of?
Fixed costs plus variable costs
What is economic growth usually measured by?
Increase in real GDP
What is market failure?
When the free market does not allocate resources efficiently
What does price elasticity of demand measure?
How strongly quantity demanded responds to a price change
Why can monopolies often charge higher prices?
Because they face little or no competition
At what point does a firm maximize profit?
Where marginal revenue equals marginal cost
What is the business cycle?
The repeated rise and fall of economic activity
Why can government intervention sometimes improve market efficiency in cases of externalities?
Because externalities cause markets to ignore social costs or benefits, leading to inefficient allocation of resources