Chat gpt terms Number 1

Scarcity

Unlimited wants but limited resources.

Choice

Selecting among alternatives because resources are scarce.

Opportunity Cost

Value of the next best alternative forgone.

Demand

Willingness and ability to purchase a good at various prices.

Quantity Demanded

Amount consumers are willing and able to buy at a specific price.

Law of Demand

As price rises, quantity demanded falls, ceteris paribus.

Demand Schedule

Table showing quantities demanded at different prices.

Demand Curve

Graphical representation of the demand schedule.

Market Demand

Sum of all individual demand curves.

Extension of Demand

Increase in quantity demanded due to a fall in price.

Contraction of Demand

Decrease in quantity demanded due to a rise in price.

Increase in Demand

Rightward shift of the demand curve.

Decrease in Demand

Leftward shift of the demand curve.

Consumer Surplus

Difference between willingness to pay and actual price paid.

Normal Good

Demand rises when income rises.

Inferior Good

Demand falls when income rises.

Substitute Goods

Goods used in place of one another.

Complementary Goods

Goods used together.

Ceteris Paribus

Holding all other factors constant.

Supply

Quantity producers are willing and able to sell at various prices.

Quantity Supplied

Amount supplied at a specific price.

Law of Supply

As price rises, quantity supplied rises.

Supply Schedule

Table showing quantities supplied at different prices.

Supply Curve

Graphical representation of supply.

Extension of Supply

Increase in quantity supplied due to price increase.

Contraction of Supply

Decrease in quantity supplied due to price decrease.

Increase in Supply

Rightward shift of supply curve.

Decrease in Supply

Leftward shift of supply curve.

Producer Surplus

Difference between market price and minimum acceptable price.

Equilibrium Price

Price where quantity demanded equals quantity supplied.

Equilibrium Quantity

Quantity traded at equilibrium.

Shortage

Quantity demanded exceeds quantity supplied.

Surplus

Quantity supplied exceeds quantity demanded.

Price Ceiling

Legal maximum price.

Price Floor

Legal minimum price.

Utility

Satisfaction from consuming goods.

Total Utility (TU)

Total satisfaction from consumption.

Marginal Utility (MU)

Additional satisfaction from one more unit.

Law of Diminishing Marginal Utility

MU eventually falls as consumption increases.

Utils

Imaginary units used to measure utility.

Assumption of Cardinal Utility

Utility can be measured numerically.

Ordinal Utility

Utility can be ranked but not measured.

Indifference Curve

Combinations giving equal satisfaction.

Indifference Map

Collection of indifference curves.

Marginal Rate of Substitution (MRS)

Amount of one good sacrificed for another while maintaining satisfaction.

Budget Line

All affordable combinations of two goods.

Consumer Equilibrium (Ordinal)

Point where budget line is tangent to indifference curve.

Higher Indifference Curve

Represents higher satisfaction.

Production Function

Relationship between inputs and output.

Fixed Input

Input that cannot change in short run.

Variable Input

Input that can change in short run.

Total Product (TP)

Total output produced.

Average Product (AP)

Output per unit of input.

Marginal Product (MP)

Additional output from one more input.

Law of Diminishing Returns

Marginal Product eventually decreases as more variable input is used.

Stage I Production

AP rising.

Stage II Production

Rational stage.

Stage III Production

MP becomes negative.

Explicit Cost

Direct monetary payment.

Implicit Cost

Opportunity cost of owned resources.

Fixed Cost (FC)

Cost that does not vary with output.

Variable Cost (VC)

Cost that changes with output.

Total Cost (TC)

FC + VC.

Average Fixed Cost (AFC)

FC/Q.

Average Variable Cost (AVC)

VC/Q.

Average Total Cost (ATC)

TC/Q.

Marginal Cost (MC)

Cost of producing one extra unit.

Short Run

At least one input fixed.

Long Run

All inputs variable.

Economies of Scale

Average cost falls as output rises.

Diseconomies of Scale

Average cost rises as output rises.

Perfect Competition

Market with many buyers and sellers selling identical products.

Price Taker

Firm accepts market price.

Average Revenue (AR)

Revenue per unit sold.

Marginal Revenue (MR)

Extra revenue from selling one more unit.

Supernormal Profit

Revenue exceeds all costs.

Normal Profit

Revenue covers all costs including opportunity cost.

Loss Minimization

Firm produces if price exceeds Average variable costs

Shutdown Point

Point where price equals minimum AVC.

Monopoly

Single seller with no close substitutes.

Price Maker

Firm can influence market price.

Barrier to Entry

Obstacle preventing new firms entering market.

Patent

Legal protection of invention.

Natural Monopoly

Monopoly due to economies of scale.

Demand Curve (Monopoly)

Downward sloping.

Marginal Revenue Curve

Lies below demand curve.

Monopoly Equilibrium

MC = MR determines output.

Monopoly Price

Found from demand curve at profit-maximizing quantity.

Price Discrimination

Charging different prices to different consumers.