Terms
the desire of one to pay for a good/service, and the ability to do so
What is demand?
As people generate more income, they will prefer brand-name products over similar, cheaper items known as . . .
What are inferior goods?
A cost that mainly remains the same no matter how much a good is produced
What is a fixed cost?
False
The total money that comes into a firm by selling its goods/services
What is revenue?
Refers to how much the quantity demanded will change when other factors (like price) change and measures how responsive consumers are to change
What is elasticity?
A cost that will rise or fall depending on the quantity of supply produced
What is a variable cost?
Governments can provide ___ for goods and services they want to have more of or learn more about.
What are subsidies?
Revenue - cost of production =
What is profit?
If an entire demand curve shifts to the right, this signifies...
What is an increase in demand?
________________ show how much a firm can reasonably produce at the prices people agree to buy the product at.
What are supply schedules?
When calculating elasticity, a coefficient less than 1 means the good/service is...
What is inelastic?
In economic terms, we use the word ___ to refer to the difference in cost, revenue, etc. when adding or producing one more unit.
What is marginal?
The law that states that people will satisfy their most urgent wants and needs first is the
What is the law of diminishing marginal utility?
As prices rise for a good or service and new businesses enter the market, ___ is created.
What is competition?
If the total cost for producing 45 units is $100, then for 46 units is $102, what is the marginal cost?
What is $2?
Latin term that acts as a shorthand indication of the effect one economic variable has on another, provided all other variables remain the same
What is ceteris paribus?
State the law of demand.
As the price of a good/service increases, the quantity demanded will decrease
State the law of supply.
The higher the price of a good people are willing to pay, the larger the quantity produced will be
The original price for good X is $55. The price rises to $65. If the quantity demanded drops from 120 to 90, what is the coefficient of elasticity?
Change in quantity = (Q2 - Q1) / Q1
(90-120)/120 = -0.25
Change in price = (P2 - P1) / P1
(65-55)/55 = 0.182
Elasticity = |Q| / |P|
0.25/0.182 = 1.37 (Elastic)