| A | B |
|---|
| demand | is the desire to own something and the ability to pay for it |
| law of demand | consumers buy more of a good when its price decreases and less when its price increases |
| substitution effect | when consumers react to an increase in goods price by consuming less of that good and consuming more of another good |
| income effect | the change in consumption resulting from the change in real income |
| demand schedule | a table that lists the quanity of a good a person will buy at each different price |
| market demand schedule | a table that lists the quantity of a good all conusmers in a market will buy at each differnt price |
| demand curve | a graphic representation of a demand schedule |
| ceteris paribus | a latin phrase that means "all other things held constant" |
| normal good | a good that consumers demand more of when their income increases |
| inferior good | a good that consumers demand less of when their incomes increase |
| complements | two goods that are bought and used together |
| substitutes | goods used in place of one another |
| elasticity of demand | a measure of how consumers react to a change in price |
| inelastic | describes demand that is not very sensitive to a change in price |
| elastic | describes demand that is very sensitive to a change in price |
| unitary elastic | describes demand whose elasticity is exactly equal to one |
| total revenue | the total amount of money a firm receives by selling goods or services |
| supply | the amount of goods available |
| law of supply | tendency of suppliers to offer more of a good at a higher price |
| quantity supplied | the amount a supplier is willing and able to suply at a certain price |
| suply schedule | a chart that lists how much of a good a supplier will offer at different prices |
| variable | a factor that can change |
| market supply schedule | a chart that lists how much of a good all suppliers will offer at different prices |
| supply curve | a graphy of the quantity supplied of a good at different prices |
| market supply curve | a graph of the quantity supplied of a good by all suppliers at different prices |
| elasticity of supply | a measure of the way quanity supplied reacts to a change in price |
| marginal product of labor | the change in the output from hiring one additional unit of labor |
| increasing marginal returns | a level of production in which the marginal product of labor increases as the number of workers increases |
| diminishing marginal returns | a level of production in which the marginal product of labor decreases as the number of workers increases |
| fixed cost | a cost that does not change, no matter how much of a good is produced |
| variable cost | a cost that rises or falls depending on how much is produced |
| total cost | fixed costs plus variable costs |
| marginal cost | the cost of producing one more unit of a good |
| marginal revenue | the additional income from selling one more unite of a good; sometimes equal to price |
| operating cost | the cost of operating a facility, such as a store or factory |
| subsidy | a government payment that supports a business or market |
| excise tax | a tax on the production or sale of a good |
| regulation | government intervention in a market that affects the production of a good |
