Demand
This law states that as price falls, quantity demanded increases.
What is the Law of Demand?
This curve shows how much producers will offer at various prices.
What is the supply curve?
These are costs that remain constant regardless of output.
What are fixed costs?
This occurs when the quantity demanded equals the quantity supplied.
What is market equilibrium?
Quickly sketch a demand curve and illustrate what happens if consumer income decreases for normal goods.
What is a leftward shift?
As income increases, demand for these types of goods decreases.
What are inferior goods?
This type of elasticity measures how responsive producers are to price changes.
What is elasticity of supply?
Hiring more workers eventually leads to lower additional output per worker, according to what law?
What is the law of diminishing returns?
A price set above equilibrium causing excess supply is known as this.
What is a surplus?
Draw a quick supply curve and illustrate what happens if new technology lowers production costs.
What is a rightward shift?
Name two goods that are complements.
What are bread and butter?
A reduction in resource costs shifts the supply curve in this direction.
What is to the right?
The increase in total cost from producing one additional unit is called what?
What is marginal cost?
What "invisible" mechanism guides voluntary exchange in markets?
What is the Invisible Hand?
Sketch equilibrium in the blueberry market; illustrate and label the shift after the price of raspberries significantly increases.
What is demand shifts right, increasing price and quantity?
The additional satisfaction gained from consuming one more unit decreases according to what principle?
What is diminishing marginal utility?
The profit-maximizing output for firms is found where marginal revenue equals what?
What is marginal cost?
If Rudy hires additional workers, initially output increases rapidly, but eventually output growth slows. Explain why.
What are diminishing marginal returns?
Allocative efficiency is achieved when firms produce output most valued by whom?
Who are consumers?
Illustrate the effect on bottled water markets when a hurricane is forecasted in Texas.
What is demand shifts right, causing prices and quantity to rise?
What will happen to the demand curve for apartments in a college town if the college significantly expands its enrollment?
What is shift to the right?
If apple pickers’ wages significantly increase, what happens to the supply curve for apples?
What is shift to the left?
These occur when larger scale production leads to lower average costs over the long run.
What are economies of scale?
A government-imposed price that cannot legally rise above a certain limit is known as this.
What is a price ceiling?
Sketch and explain the market impact if new gold deposits are discovered.
What is supply shifts right, price falls, quantity rises?