| A | B |
|---|
| Desire to have a good or service and the ability to pay for it | Demand |
| What is the key part of the demand definition? | Ability to pay for it |
| The relationship between price and demand is what kind of a relationship? | Inverse |
| If the price of a good rises which way does the demand go? | Down |
| What are the 6 factors of demand? | Income, Market size, Consumer taste, Comsumer expectations, Complementary goods, Substitute Goods |
| Goods people buy more of when their income rises? | Normal goods |
| Goods people by less of when their income rises? | Inferior goods |
| What can strongly influence consumer taste? | Advertising |
| Substitute goods have what kind of relationship with each other? | Inverse |
| Complementary goods have what kind of relationship with each other? | Direct |
| Consumer demand is dependent on what? | Price |
| T/F: Demand and price are often fixed. | False |
| How respondent consumers are to price change? | Elasticity of demand |
| If a change in price leads to a large change in demand the product is said to be what? | Elastic |
| A large change in price that leads to a small change in demand the product is said to be what? | Inelastic |
| The idea of elasticity is often compared to what? | Rubber band |
| What drives production? | Profits |
| change in total product that results from hiring one more worker? | Marginal Product |
| having each worker focus on a particular facet of production? | Specialization |
| each new worker adds more to total output than the last? | Increasing Returns |
| each new worker causes total output to grow but as a decreasing rate. | Diminshing Returns |
| expenses that the owners of a business must incur whether they produce nothing, a little or a lot | Fixed Cost |
| What are some examples of fixed costs? | Some salaries, bills, mortgage, insurance |
| business costs that vary as the level of production output changes. | Variable Cost |
| What are some examples of variable costs? | Some wages, supply costs, shipping |
| What are the 6 factors that affect supply? | Technology, Government action, Labor productivity, Input costs, Number of producers, Producer expectations |
| price at which the quantity of a product demanded by consumers and the quantity supplied by producers are equal | Equilibrium Price |
| Equilibrium price is often discovered by what process? | Trial and Error |
| quantity supplied being greater than quantity demanded | Surplus |
| quantity demanded being greater than quantity supplied | Shortage |
| Usually happens because the price is to high? | Surplus |
| Usually happens because the price is too low? | Shortage |
