Basic Economics/Supply and Demand
This term describes the problem that resources are limited, but human wants are unlimited.
What is scarcity?
When quantity demanded changes a lot in response to price, demand is said to be this.
What is elastic?
Many firms, identical products, and no barriers to entry describe this structure.
What is perfect competition?
Goods that are non-rival and non-excludable.
What are public goods?
The satisfaction a person gets from consuming a good.
What is utility?
The value of the next best alternative that must be given up when making a choice.
What is opportunity cost?
When quantity demanded changes little with price, demand is this.
What is inelastic?
Many firms selling similar but not identical products.
What is monopolistic competition?
When someone benefits from a good without paying for it.
What is the free rider problem?
The principle that each additional unit of a good provides less satisfaction.
What is the law of diminishing marginal utility?
All the alternatives you give up when you make a decision are known as these.
What are trade-offs?
If a good’s demand curve is vertical, demand is this.
What is perfectly inelastic?
One firm, unique product, and high barriers to entry.
What is a monopoly?
A legal minimum price set above equilibrium, often causing surpluses.
What is a price floor?
Producing a good at a lower opportunity cost than others.
What is comparative advantage?
This law states that as price decreases, quantity demanded increases.
What is the Law of Demand?
The difference between what producers receive and the lowest price they’d accept.
What is producer surplus?
Costs that change depending on output.
What are variable costs?
Wages are determined by these two market forces.
What are supply and demand?
Producing more output with the same resources.
What is absolute advantage?
Name two determinants of supply.
What are input prices, technology, taxes/subsidies, expectations, or number of sellers?
This is achieved when total surplus (consumer + producer) is maximized.
What is market efficiency?
The cost of producing one more unit.
What is marginal cost?
A market where there’s only one buyer of labor.
What is a monopsony?
When countries or individuals focus on what they’re best at and trade with others.
What is specialization and trade?