| A | B |
|---|
| demand | amount of a good or service that consumers are able and willing to buy |
| supply | amount of a good or service that producers are able and willing to sell |
| utility | ability of any good or service to satisfy consumer wants |
| market | process of freely exchanging goods and services between buyers and sellers |
| real income effect | inabliity to buy the same quantity of a good if prices rise while income does not |
| elastic demand | situation in which the rise or fall of a products price greatly affects the amount people will buy |
| ineleastic demand | situation in which a product's price change has little impact on the quantity demanded by consumers |
| demand curve | line that graphically shows the quantities demanded at each possible price |
| demand schedule | table showing quantities demanded at different prices |
| elasticity | economic concept dealing with consumers' responsiveness to an increase or decrease in price |
| supply curve | line that graphically shows the quantitities supplied at each possible price |
| equilibrium price | price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy |
| shortage | situation in which the quantity demanded is greater that the quantity supplied |
| surplus | situation in which the quantity supplied is greater that the quantity demanded |
| voluntary exchange | occurs between buyers and sellers in a free market economy |
| diminishing marginal utility | as you consume more of an item,you will receive less satisfaction from each additional one. |
| substitution effect | using a similiar product in place of another item due to higher price or lack of availability |
| law of diminishing returns | continued addition of workers will eventually result in lower marginal production |
| profit motive | encourages suppliers to produce different and better products |
| As price goes up . . . | demand goes down |
| As price goes down . . . | demand goes up |
| Supply goes up . . . | as prices increase |
| Supply goes down . . . | as prices decrease |
| substitution effect | if you buy Sam's Cola instead of Coke |
| complement | two items that are generally bought together - hot dogs and hot dog buns |
| variable cost | Cost that rises or falls depending on how much is produced |
| operating cost | The entire cost of running a store/business. |
| regulation | Government intervention in a market that affects the production of a good |
| total cost | Fixed cost plus variable cost |
| excise tax | Tax on production or sale of a good |
| fixed cost | Cost that does not change no matter how much of a good is produced |
| subsidy | Government payment that supports a business. |
| black market | Place in which goods are sold illegally |
| minimum wage | Minimum price that an employer can pay a worker for an hour of labor |
| price floor | Minimum price for a good or service |
| rent control | Price ceiling placed on rent |
| rationing | System of allocating scarce goods & services using criteria other than price |
| price ceiling | Maximum price that can be legally charged for a good or service |
| elasticity of supply | Measure of the way quantity supplied reacts to a price change |
