Vocabulary
Limited resources and unlimited wants
What is scarcity?
What causes a shortage?
Demand exceeds supply
Where supply equals demand
What is equilibrium?
A market structure has many sellers and identical products
What is Perfect competition?
Law of demand
If prices rise because demand is high, what concept explains this?
What is opportunity cost?
The next best alternative given up
What causes a surplus?
Supply exceeds demand
Quantity supplied equals quantity demanded
What happens at equilibrium price?
A market structure has only one seller
What is a Monopoly?
Demand
If a business lowers prices to attract customers, what is this responding to?
What is a trade-off?
Giving up one option for another
Price increases and supply stays the same
What happens to price when demand increases?
Price increases while demand stays the same.
What happens to price during a shortage?
A market structure has a few large firms
Which is an Oligopoly?
Law of supply
If a company produces more when prices rise, what concept is this?
What is an incentive?
Something that motivates behavior
Price increases and demand stays the same
What happens to price when supply decreases?
Price and demand decreases
What happens to price during a surplus?
A market structure has many sellers with slightly different products
What is Monopolistic competition?
Opportunity cost
If you choose to save money instead of spending it, what are you considering?
Labor, land, capital, entrepreneurship...
What are the 4 factor of production?
Price decreases and demand stays the same
What happens to price when supply increases?
This is the goal of price adjustments in a market
What is to reach equilibrium?
A market structure gives consumers the MOST choices
What is a Monopolistic competition?
The owner of a business
What is an Entrepreneur?