Core Economic Principles
This happens because we have unlimited wants but not enough resources.
What is scarcity?
When prices go up, people usually buy less. This is called…
What is the law of demand?
How much people change how much they buy when the price changes.
What is price elasticity of demand?
A market with many sellers, all selling the same thing, and none can set the price.
What is perfect competition?
The total amount of goods and services made in a country in one year.
What is GDP?
The cost of choosing one thing over another.
What is opportunity cost?
Something that can change demand without changing the price, like income or tastes.
What is a determinant of demand?
A good that people buy more of when they have more money.
What is a normal or luxury good?
A market with only one seller.
What is a monopoly?
The general increase in prices over time.
What is inflation?
The extra satisfaction you get from consuming one more unit of something.
What is marginal utility?
When the amount people want equals the amount sellers provide.
What is market equilibrium?
If a small price change causes a big change in buying, the product is called…
What is elastic?
A market with a few sellers who control the price and watch each other.
What is an oligopoly?
The total number of people who want to work but can’t find a job.
What is unemployment?
A simple model that shows how people decide how to spend their money.
What is the budget constraint model?
A law that sets the maximum price sellers can charge.
What is a price ceiling?
When a company charges different prices to different groups of people.
What is price discrimination?
A market with many sellers who sell similar but slightly different products.
What is monopolistic competition?
When the government changes spending or taxes to help the economy.
What is fiscal policy?
People will keep doing something as long as the extra benefit is bigger than the extra cost.
What is the principle of marginal analysis?
When something makes it easier or harder for sellers to provide a product, it shifts the supply curve.
What is a change in supply?
A company sets a low price at first to attract customers and stop competitors.
What is penetration pricing?
A monopoly that exists because it’s cheaper for one company to make everything than for many companies.
What is a natural monopoly?
When the central bank changes interest rates or the money supply to help the economy.
What is monetary policy?