ECO 110 Berry College Test 1 Vocab

1st economic exam

Scarcity

in short supply; shortage.

Opportunity Cost

the loss of potential gain from other alternatives when one alternative is chosen.

Comparative Advantage

the ability of an individual or group to carry out a particular economic activity (Production) more efficiently than another activity.

Law of Demand

states that, all else being equal, as the price of a good or service decreases, the quantity demanded for that good or service increases, and vice versa.

Inverse/Negative Relations

refers to the relationship between two variables where an increase in one leads to a decrease in the other, and vice versa. For example, the price and quantity demanded of a good often have a negative relationship according to the law of demand.

Elasticity

measures the responsiveness of the quantity demanded or supplied of a good to changes in its price or other factors. If demand or supply is elastic, it means that the quantity changes significantly in response to small price changes.

Inelastic

refers to a situation where the quantity demanded or supplied of a good does not change much in response to changes in price.

Elastic

refers to a situation where the quantity demanded or supplied of a good changes significantly in response to changes in price.

Changes in Demand

occur when factors other than price, such as consumer preferences, income, or expectations, affect the quantity of a good or service consumers are willing and able to buy.

Supply Shifters

factors like technological advancements, input prices, or government regulations.

Entrepreneurial Ability

refers to the unique skills, innovation, and risk-taking behavior of individuals who create and manage businesses.

Law of Supply

states that all else being equal, as the price of a good or service increases, the quantity supplied of that good or service also increases, and vice versa.

Complimentary Goods

are products that are typically consumed or used together. When the price of one complementary good changes, it can affect the demand for the other (e.g., hot dogs and hot dog buns)

Substitute Goods

are products that can be used to replace each other. When the price of one substitute good changes, it can influence the demand for the other (e.g., Coke and Pepsi).

Marginal Value

is the additional benefit or utility gained from consuming or producing one more unit of a good or service.

Total Value

is the overall benefit or utility derived from consuming or producing all units of a good or service.

Consumer Surplus

the difference between what consumers are willing to pay for a good or service and what they actually pay. It represents the consumer's gain from trade.

Consumer Shortage

occurs when the quantity demanded exceeds the quantity supplied at a given price, leading to unmet.

Producer Surplus

is the difference between the price at which producers are willing to sell a good or service and the actual price they receive. It represents the producer's gain from trade.

Producer Shortage

happens when the quantity supplied is less than the quantity demanded at a given price, leading to unsold goods.

Output

refers to the quantity of goods or services produced by a firm or an economy within a specific period.

Labor, Land, Capital

These are the factors of production. Land represents natural resources, labor is human effort, and capital includes physical and human-made resources like machinery and knowledge used in production.

Elasticity of Supply

measures how the quantity supplied of a good or service responds to changes in its price. It indicates the flexibility of producers to adjust production in response to price changes.

Market

is a place or a system where buyers and sellers come together to exchange goods and services.

Equilibrium

is the state in which the quantity demanded equals the quantity supplied, resulting in a stable market price.

Economically Efficient

an economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.