Production and Cost
This is the additional cost of producing
one more unit of a good.
What is marginal cost
If a worker only makes shoes all day instead of making shoes, hats, and shirts, what is this called?
What is Specialization?
This measures how much quantity demanded or supplied responds to a change in price.
What is elasticity
A government-mandated "price max" meant to keep things affordable that usually ends up causing a shortage
what ia a price ceiling
This basic economic law states that when prices go up, consumers usually buy less of a good.
What is law of demand?
These costs do not change no matter how much a firm produces, like rent or insurance.
What are fixed costs
A farmer grows only corn and trades with another farmer who grows nly wheat. What are they doing?
What is trading?
If a small change in price causes a big change in quantity demanded, what type of demand is this?
What is elastic demand
If everyone starts switching from Netflix to Youtube because its free, Youtube is acting as this type of related good
what is a substitute
When the price of a good is set below equilibruim, this situation occurs, where quantity demended exceeds quantity supplied
What is a shortage?
This curve typically slopes upward because producing more units often becomes more expensive.
What is the marginal cost curve
If a person trades something they made for something they need, what is this called?
What is exchange?
What is the formula used to calculate price elasticity of demand using percentage changes?
What is percentage change in quantity demanded divided by percentage change in price
When a company makes 1 million copies of a game but only 10,000 people buy it, the market is stuck with this "extra" inventory
what is surplus
This occurs when a change in price causes movement along with the demand curve, rather than shifting the curve itself.
What is a change in quantity demanded?
This term describes the total cost divided
by the number of units produced.
What is average cost
Country A can make 10 cars or 5 trucks. Country B can make 6 cars or trucks. Which country should specialize in making cars?
What is country A? (Lower opportunity cost)
If the value of elasticity is greater than 1, what does that tell us about how consumers respond to price changes?
What is demand is elastic
Imagine a base open earbuds has been priced $150 for two years. Suddenly, Bad Bunny is seen wearing them in a "get ready with me" video, and a week later, they are sold out everywhere in San Antonio. Even though the price tag hasn´t moved a single cent, the entire demand curve has shifted to the right.
What are consumer taste and prefrences
This type of good sees demand increase as its price rises, due to its status as a symbol of wealth or prestige.
What is a Veblen good?
This concept explains why producing more at first lowers average cost, but eventually increases it due to inefficiencies.
What are the law of diminishing
If a country spends less time making shoes than another country, what should it do?
What is specialize in making shoes?
If a price change causes total revenue to stay exactly the same, what is the elasticity of demand equal to?
What is unitary elastic (elasticity = 1)
For things that take years to build (like a new movie studio), the supply is considered this in the "Short run" because you can´t just make more overnight.
What is inelastic supply
When both supply and demand decrease simultaneously, but the decrease in supply is greater than the decrease in demand, the equilibrium price will _____, while the equilibrium quantity will _____.
What is price increases, and quantity decreases?