Unit 1
The term for the study of how individuals and societies allocate limited resources to satisfy unlimited wants
What is economics?
The law of demand
What is as the price of a good decreases, the quantity demanded increases?
Additional output produced by one more unit of labor
What is marginal product?
limited resources compared to unlimited wants
What is scarcity?
What happens to the demand curve when consumer income increases for a normal good?
What is the demand curve shifts to the right?
The four factors of production
What are land, labor, capital, and entrepreneurship?
Responsiveness of quantity demanded to a change in price
What is price elasticity of demand?
Type of cost does not change depending of the level of output in the short run
What are fixed costs?
next best alternative given up when making a choice
What is opportunity cost?
What happens to the demand curve for a good if it becomes less popular due to a change in consumer tastes and preferences?
What is the demand curve shifts to the left?
Graph that shows all combinations of two goods that can be produced with the same available resources
What is a production possibilities curve?
Goods for which demand increases as income rises
What are normal goods?
market structure where a few large companies control most of the supply of a product
oligopoly
quantity supplied equals quantity demanded in a market
What is equilibrium?
What happens to the demand curve for a substitute good if the price of the original good increases?
What is the demand curve shifts to the right?
A point inside the production possibilities curve
What is inefficient?
If two goods are substitutes, what happens to the demand for Good A if the price of Good B increases?
The demand for Good A increases
The profit-maximizing rule for a perfectly competitive firm
What is MC=MR?
measure of how much quantity demanded or supplied responds to a change in price
What is elasticity?
What happens to the supply curve if a new technology improves production efficiency?
What is the supply curve shifts to the right?
What is the idea that the more you use or eat something, the less happy it makes you each time?
Diminishing marginal utility
The five determinants of demand
What are consumer tastes and preferences, income, prices of related goods, future expectations, and number of consumers?
The long-run equilibrium condition for firms in a perfectly competitive market
What is firms produce at the minimum point of the average total cost curve?
a good that people consume less of as their income increases
inferior good
Name one non-price determinant that can shift the supply curve
What is technology, input costs, government taxes/subsidies, or future expectations?