2 FUNDAMENTAL MARKET PRINCIPLES

Economics with Mendez at White Bear Lake High School

About this deck

By: Andrew Mendez
Created: 2011-10-05
Size: 29 flashcards
Views: 16

About StudyBlue

STUDYBLUE makes things that make you better at school. Things like online flashcards with photos and audio. Things like personalized quizzes and friendly reminders about when (and what) to study next. Think of it as a digital backpack™: access to all of your study materials online and on your phone. STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy

Sign up (free) to study this.

complements

goods that go together with other goods
examples: hot dogs and hot dog buns, shampoo and hair brushes

cost

the idea of potential lost value
associated with 'supply'

demand

the total number of consumers willing and able to buy a good at various prices during a specific point in time
a measurement of value

demand curve

a visual representation showing the total number of consumers willing and able to buy a good at various prices during a specific point in time

demand schedule

a two-column chart listing the quantities demanded of a good or service by consumers at various prices

diminishing marginal returns

the phenomenon in which added satisfaction [in using a good or service] decreases with each additional use of it
OR the reality that for each additional unit produced, additional value decreases little by little

elasticity

the relationship between price changes and changes in demand/supply

equilibrium

the balance between demand and supply
the point at which quantity demanded and quantity supplied are the same

factors of production

all the things necessary to produce a good or service efficiently

income effect

as consumers can afford more, their demand for more expensive items also increases

inferior good

things that consumers buy more of when their income decreases

input costs

any production-related expense experienced by a producer

examples: payroll, utility bills, physical capital

invisible hand

what sets the equilibrium price and quantity of a market
the natural balance caused by producers and consumers pursuing their self-interest
a term coined by 18th-century British economist Adam Smith

law of demand

as the price decreases, the quantity demanded decreases

law of supply

as the price increases, so does the quantity supplied

luxury good

goods that are purchased when the economy is strong
goods that consumers buy less of when economic times grow uncertain

normal good

goods that consumers buy more of when their income increases

price ceiling

a permanent shortage enforced by the government
example: rent control

price floor

a permanent surplus enforced by the government
example: minimum wage

quantity demanded

the amount of goods/services demanded [by a select group of consumers] at a specific price

quantity supplied

the amount of goods/services supplied [by a select group of producers] at a specific price

shortage

a condition caused when the quantity demanded is greater than the quantity supplied

substitutes

goods that take the place of other goods
goods that are essentially the same as other goods
examples: Coca-Cola, Pepsi, RC, Sam's Choice cola

substitution effect

as the price of a good increases, consumers may purchase similar alternatives instead

supply

the total number of producers willing and able to sell a good at various prices during a specific point in time

supply curve

a visual representation showing the total number of producers willing and able to sell a good at various prices during a specific point in time

supply schedule

a two-column chart listing the quantities supplied of a good or service by producers at various prices

surplus

a condition caused when the quantity supplied is greater than the quantity demanded

value

the idea of something having worth
associated with 'demand'

About this deck

By: Andrew Mendez
Created: 2011-10-05
Size: 29 flashcards
Views: 16

About StudyBlue

“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy