Economics Unit 2
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| Profit | the total revenue a firm receives from selling its product minus its cost of production
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| Quantity supplied | the amount of a good that firms are willing to supply at a specific price over a period of time
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| Law of supply | an increase in the price of a good leads to an increase in the quantity supplied
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| Supply schedule | a table listing the quantity of a good that will be supplied at specific prices
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| Supply curve | a graph of a firm's supply schedule, showing the quantity the firm will supply at each price
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| Perfect competition | when one market's firms sell identical goods, are free to enter and exit the market, and consumers have information about the availability and price of goods
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| Elasticity of supply | how responsive a firm is (if its quantity supplied changes) based on the cost of production changing
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| Short run | the period of time during which the quantity of which at least one input is fixed
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| Long run | the period of time in which the quantities of all inputs are variable
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| Production schedule | a table that indicates the quantity of inputs needed to produce different quantities of output
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| Marginal product of labor | the amount by which worker output increases when one more worker is hired
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| Fixed cost | the cost of inputs that do not vary with the amount of outputs produced, inputs like machinery or equipment
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| Variable cost | the cost of inputs that do vary with the amount of output produced
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| Marginal cost | the additional cost of producing one more unit of output
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| Marginal revenue | the additional revenue a firm receives from selling one more unit
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| Law of demand | economic law that states that as price increases, demand decreases
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| Quantity demanded | the amount of a good that consumers are willing and able to purchase at a specific price over a given period of time
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| Substitution effect | when an increase in the price of a good causes consumers to substitute it with a similar good of a lower price
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| Income effect | when a price increase causes customers to feel poorer, or when a price decrease causes customers to feel richer
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| Demand schedule | a table that shows the quantity of a good that is demanded at different price points
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| Demand curve | a graph of a firm's demand schedule that shows the quantity demanded at each price
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| Market demand curve | a graph of how the quantity demanded by all consumers shifts at each price point within a market
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| Market structure | term economists use to describe the nature of a competition within a market
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| Perfect competition | market structure where many firms supply and compete to sell the same product
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| Imperfect competition | market structure that arises when there is not enough competition among firms to prevent individual firms from raising the market price above equiilibrium
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| Product market | the market for a good that includes all those products consumers consider to be close substitutes for that good
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| Monopoly | a product market served by only one firm called a monopolist
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| Market power | when a monopolist has no competition, resulting in the power to influence the market price
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| Natural monopoly | a market in which high start-up costs make it exclusively expensive for more than one firm to operate
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| Price discrimination | the practice of charging different customers different prices for the same good
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| Oligopoly | a market with a small number of firms called oligopolists
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| Collusion | when firms in an oligopoly decide to work together to restrict output and raise prices
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| Cartel | a group of firms that collude to monopolize a market, or that agree to work together to act like a monopoly
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| Sole proprietorship | a business firm owned by one person called the proprietor
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| Partnership | a for-profit business firm owned by two or more partners, each who has a financial interest in the business
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| Partnership agreement | a written document that identifies the roles and responsibilities of each partner in a partnership
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| General partners | business partners that share full decision making
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| Limited partners | business partners that invest money in the partnership but do not share financial responsibility or decision making
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| Corporation | a business that is itself a legal entity, meaning that the law treats it similarly to a human being
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| Stockholders | people who have purchased shares of stock of a corporation's profits
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| Private corporation | when one person owns all the shares of a corporation
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| Corporate charter | a statement of how corporation will raise money for start-up costs, how many shares of stock can be sold to investors, and what the corporation's organizational structure will look like
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| Limited Liability Corporation (LLC) | a hybrid business organization that combines features of corporations, partnerships, and sole proprietorships to enjoy limited liability
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| Business franchise | consists of a parent company and numerous associated businesses that sell a standardized
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| Franchiser | business within a franchise that owns a recognized brand or trademark, and is the only one who can legally produce that product or authorize other companies to do the same
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| Franchisee | pays the franchiser a franchise fee to offer their good or service at their location
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| Cooperative | a business owned by its members to supply members and others with specific goods/services at a discounted price
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| Nonprofit organization | a legal entity formed to carry out a not-for-profit mission and is therefore exempt from business taxes
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| Income statement | a list of businesses' revenue, expenses, and profit over a specific time period that helps them comply with tax laws
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| Depreciation | the dollar value of capital that is used up due to aging and wear, typically thought of as an expense listed on an income statement and is reinvested back into the business to replace depreciated capital
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| Net profit | the profit made after subtracting taxes paid
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| Merger | when two firms legally combine to make a single, larger firm
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| Horizontal merger | the combining of two companies that produce the same type of product
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| Vertical merger | the combining of companies that operate at different stages of the production process
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| Conglomerate | enterprise formed by combining companies in unrelated industries
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