Economics: Markets, Elasticity, and Production Lecture Notes

Comprehensive fill-in-the-blank flashcards covering price controls, elasticity of demand, production possibilities, market conditions, and externalities.

A maximum price set by the government below the equilibrium price is also known as a __________.

price ceiling

A __________ occurs when the government sets a minimum allowable price above the equilibrium price.

price floor

A __________ demand curve exists only if there are perfect substitutes, and it leads to an infinite change in the quantity demanded.

Perfectly elastic

A small change in price will lead to a big change in quantity demanded in a __________ demand curve.

Relatively elastic

__________ demand occurs when a change in price results in an equivalent change in demand, such as a $10\%$ change in price leading to a $10\%$ change in demand.

Unitary elastic

In __________ demand, quantities are fixed and remain the same even if the price goes up or down by a large amount.

Perfectly inelastic

The percentage change produced in demand is less than the percentage change in price in __________ demand.

Relatively inelastic

The __________ is a graph that shows the maximum different combinations of two goods that can be produced using all available resources.

Production possibility curve

__________ goods satisfy an immediate want or need for the final consumer and can be durable or non-durable.

Consumer

Goods used in the production of other goods and services that do not satisfy an immediate want are called __________ goods.

Capital

A __________ is defined as any platform or arrangement that brings together producers and consumers of a good or service.

Market

__________ is the willingness and ability of consumers to buy goods and services.

Demand

The willingness and ability of a firm to provide goods and services at a given price is called __________.

Supply

__________ measures the responsiveness of change in quantity demanded following a change in the price of a product.

Price elasticity

__________ occurs when the quantity demanded by consumers exactly equals the quantity supplied by producers.

Market equilibrium

Services like street lighting that are freely available to everyone without reducing availability to others are called __________.

Public goods

Goods and services that create positive spillover effects in an economy when consumed are known as __________.

Merit goods

__________ cause negative effects on an economy when consumed.

Demerit goods

The true cost of consumption or production, which includes private cost plus external costs, is called __________.

social cost

Costs of production directly incurred by individuals, firms, and the government are __________.

Private costs

The negative side effects of production or consumption incurred by third parties for which no compensation is paid are __________.

external costs

__________ occurs when the market forces of demand and supply fail to allocate resources effectively and cause external costs.

Market failure

An economic system that relies on market forces of demand and supply with minimum government intervention is a __________.

Market economy

A __________ economy is dominated by the government, whereas a mixed economy involves both government and private sector dominance.

Planned