Supply & Demand
What is the demand curve?
The graphical representation of the relationship between price and quantity demanded.
What is price elasticity of demand?
A measure of how responsive quantity demanded is to a price change.
What are fixed costs?
Costs that do not change with the level of output.
What is perfect competition?
A market structure with many firms selling identical products.
What is utility?
The satisfaction or pleasure derived from consuming a good or service.
What is a price floor?
A government-set minimum price above equilibrium.
What is elastic?
If the price elasticity of demand is greater than 1, demand is said to be this.
What are variable costs?
Costs that vary directly with the level of output.
What is a monopoly?
A firm that is the only seller of a unique product.
What is diminishing marginal utility?
The concept that as you consume more of a good, the additional satisfaction decreases.
What is a shortage?
When quantity demanded exceeds quantity supplied.
What is % change in quantity demanded รท % change in price?
The formula used to calculate price elasticity of demand.
What is marginal cost?
The cost of producing one additional unit of output.
What is an oligopoly?
The type of market structure where a few large firms dominate the market.
What is consumer equilibrium?
The combination of goods that maximizes a consumer's satisfaction given their budget.
What are substitutes?
The term for goods that can replace each other, like tea and coffee.
What is the income elasticity of demand?
The type of elasticity that measures how demand for one good responds to a change in income.
What is the efficient scale?
The point where average total cost is minimized.
What is monopolistic competition?
A market structure with many firms selling similar but not identical products.
What is a budget constraint?
The term for a graph showing all the combinations of two goods a consumer can afford.
What is perfectly inelastic demand?
A situation where a small change in price leads to no change in quantity demanded.
What are substitute goods?
Goods with a positive cross-price elasticity, like Coke and Pepsi.
What are economies of scale?
When a firm's average costs decrease as output increases.
What is a price maker?
The term for a firm that has the ability to influence the market price of its product.
What is an indifference curve?
The curve that shows combinations of two goods that provide the same level of satisfaction.