Other things remaining equal, people will purchase a smaller quantity of any good or service they want as the price of purchasing one more unit of it increases
100
What is marginal utility?
The additional utility gained from consuming an additional unit of a good or service
100
What is the price elasticity of demand?
The percentage change in the quantity of a good demanded resulting from a one percent change in its price
100
What is short run?
A period of time sufficiently short that at least some of the firm's factors of production cannot be changed
100
What is the law of diminishing returns?
Given that all other inputs and technology are fixed, beyond some point the marginal product of labour decreases as successively more units of labour are employed
200
What is utility?
The sense of well-being, satisfaction or pleasure a person derives from consuming a good or service
200
What is the income effect?
The change in quantity demanded of a good that occurs because of a change in the price of the good changes the real income of the purchaser
200
What is elastic, inelastic and unitary elastic demand?
Elastic: price elasticity is greater than one
Inelastic: price elasticity is less than one
Unitary: price elasticity equals one
200
What is long run?
A period of time of sufficient length that all the firm's factors of production are variable
200
What are the three types of profit?
Accounting, economic and normal
300
What is utility maximization?
Economists assume people try to allocate their incomes to maximize their satisfaction
300
What is substitution effect?
The change in quantity demanded of a good whose relative price has changed while a consumer's real income is held constant
300
For a price whose demand is price inelastic, will an increase in price increase total expenditure?
Yes
300
What is production function?
A technological relationship between inputs and outputs
300
If economic losses cause firms to leave a market, the short run supply curve will shift left or right?
Left
400
What is a util?
A unit of pleasure or utility obtained from an item
400
What is nominal price?
The absolute price of a good in current dollar terms
400
What is factor of production?
An input used in the production of a good or service
400
What is fixed factor of production?
An input whose quantity cannot be altered in the short run
400
Diseconomies of scale happen when?
Long-run average cost increases as the scale of a firm increases
500
How would you calculate marginal utility?
Change in utility/Change in consumption
500
What is real price?
The dollar price of a good relative to the average dollar price of all other goods and services
500
What is intermediate input?
An input that is used up in the production process
500
What is variable factor of production?
An input whose quantity can be altered in the short run
500
What is economic rent?
The portion of the payment for an input that exceeds the lowest price a supplier will accept for that input