Cleaner version ECO test week

Economics

The study of how individuals and societies allocate scarce resources to satisfy unlimited wants.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices.

Law of Demand

A principle stating that when the price of a good rises, the quantity demanded falls, and vice versa, indicating a negative relationship.

Market Equilibrium

The condition where quantity demanded equals quantity supplied, leading to no excess supply or demand.

Perfect Competition

A market structure characterized by many firms selling identical products with no individual firm having market power.

Monopoly

A market structure where a single firm dominates the market, facing no competition.

Negative Externality

A cost suffered by a third party due to economic transactions they are not a part of, such as pollution.

Price Elasticity of Demand (PED)

A measure of the responsiveness of quantity demanded to changes in the price of a good.

Income Elasticity of Demand (YED)

A measure of how much the quantity demanded of a good changes in response to a change in consumer income.

Price Controls

Government-imposed limits on the prices that can be charged for goods and services, including price ceilings and floors.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning one person's consumption does not reduce availability for others.

Market Failure

A situation in which the allocation of goods and services is not efficient, often due to externalities or information asymmetries.

Substitute Goods

Products that can be used in place of each other; an increase in the price of one leads to an increase in demand for the other.

Demerit Good

Goods whose consumption is considered harmful or unhealthy, leading to potential overconsumption in a free market.

Marginal Private Cost (MPC)

The additional cost incurred by producers to produce one more unit of a good.

Rational Producer Behavior

The decision-making process of firms aimed at maximizing profits through efficient resource allocation and production levels.

Elasticity

The degree to which a variable changes in response to a change in another variable, often relating to demand and supply.

Government Intervention

Actions taken by government to influence the economy, often to correct market failures or control prices.