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Ch.3,4,5
Ch.3
Elasticity of Demand | The degree to which price changes in the price of a good or service affect quantity demanded |
Elastic Demand | the situation that exist when quantity demanded changes greatly in respond to a change in price |
Inelastic Demand | the situation that exist when quantity demanded changes only sightly or not at all in respons to a change in price |
Total Revenue | a businesses total income sometimes called total receipts |
Law of Supply | the principle that producers will supply more of a product or service at higher prices but less of a product or service at lower prices |
Profit Motive | the desire to make money |
Cost of Production | the total cost of materials, labor, and other inputs required in the manufacture of a product |
Supply Curve | a graphic representation of a supply schedule, showing the relationship between the price of an item and the quantity supplied during a given time period, with all other things being equal. |
Determinant of Supply | a non-price factor that influences the available supply of a good or service |
Tax | a required payment to a local, state, or national gov't usually made on some regular basis |
Law of diminishing Returns | the principle that as more of one input ( such as labor) is added to a fixed supply of other resources( such as capital) productivity will increase up to a poingt after which the marginal product will diminish |
Overhead | the sum of a businesses fixed cost except for wages and the material cost |
Variable cost | a cost of doing business that changes directly with a change in the level of output, typically rising and dropping as production increases and decreases |
Marginal cost | the cost of producing one additional unit of output |
Market Failure | a flaw in a price system that occurs when some cost have not been accounted for and therefore are not properly distributed |
Externality | an effect that an economic activity has on people and susinesses that are neither producers or consumers of the good or service being produced. May be either positve or negative |
Public Good | any good or service that is consumed by all memebers of a group regardless of who has helped pay for it |
Market equilibrium | the point at which the quantity supplied and the quantity demand for a product are equal at the same price |
Surplus | a situation in which the quantity supplied of an item at a given price exceeds the quantity demanded |
shortage | a situation in which the quantity demanded of a good or resource exeeds the quantity supplied |
price ceiling | a gov't regualtion that sets a maximum price for a particular good |
price floor | a gov't regulation that sets a minimum price for a particular good |
minimum wage | the lowest hourly wage rate that an empoyer can legally can pay a worker, as established by federal law |
rationing | a systme by wich a gov't or other institution decides how to distribute a good or a service, rationing is usually the result of limited supply |