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an organization that transforms resources (inputs) into products (outputs).
firm
is a person who organizes, manages, and assumes the risks of a firm
entrepreneur
are the consuming units in an economy.
Households
shows the connections between firms and households in input and output markets.
circular flow of economic activity
are the markets in which goods and services are exchanged
Output, or product markets
The markets in which resources, labor, capital, and land used to produce products, are exchanged.
Input market
It is a input market in which households supply work for wages to firms that demand labor.
Labor market
It is a input market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods.
Capital market
It is a input market in which households supply land or other real property in exchange for rent.
Land market
is the amount (number of units) of a product that a household would buy in a given time period if it could buy all it wanted at the current market price.
Quantity demanded
It is a table showing how much of a given product a household would be willing to buy at different prices.
demand schedule
It is a graph illustrating how much of a given product a household would be willing to buy at different prices.
demand curve
This law states that there is a negative, or inverse, relationship between price and the quantity of a good demanded.
law of demand
Demand curves intersect the quantity ____-axis, as a result of time limitations and diminishing marginal utility.
X- axis
Demand curves intersect the _____-axis, as a result of limited incomes and wealth.
Y-axis
It is the sum of all households wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time. It is a flow measure.
Income
It is the total value of what a household owns minus what it owes. It is a stock measure.
Wealth or net worth
These are goods for which demand goes up when income is higher and for which demand goes down when income is lower.
Normal Goods
These are goods for which demand falls when income rises
Inferior Goods
These are goods that can serve as replacements for one another.
Substitutes
These are goods that “go together”
Complements
Demand shifts to the ________, demand increases. This causes quantity demanded to be greater than it was prior to the shift, for each and every price level.
Right
A Change in Demand Versus a Change in Quantity Demanded
It is a change in price of a good or service leads to change in
quantity demanded
A Change in Demand Versus a Change in Quantity Demanded:
Change in the non-price determinants of demand leads to change in
demand
Demand for a good or service can be defined for an _______________, or for a group of households that make up a market.
individual household
It is the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service.
Market demand
It is a table showing how much of a product firms will supply at different prices.
supply schedule
This represents the number of units of a product that a firm would be willing supply.
Quantity supplied
It is a graph illustrating how much of a product a firm will supply at different prices.
supply curve
This law states that there is a positive relationship between price and quantity of a good supplied.
law of supply
A higher price causes higher quantity supplied, and a move along the supply curve is an example of a change in
Change in supply
A Change in Supply Versus a Change in Quantity Supplied
Change in price of a good or service leads to change in
Quantity supplied
Change in the non-price determinants of supply leads to change in
Supply
It is the sum of all the quantities of a good or service supplied per period by all the firms selling in the market for that good or service.
Market supply
The operation of the market depends on the interaction between buyers and sellers.
Market Equilibrium
it is the condition that exists when quantity supplied and quantity demanded are equal.
equilibrium
Only in _________________ is quantity supplied equal to quantity demanded.
equilibrium
It is the condition that exists when quantity demanded exceeds quantity supplied at the current price
Excess demand, or shortage
It s the condition that exists when quantity supplied exceeds quantity demanded at the current price.
Excess supply, or surplus
It leads to higher equilibrium price and higher equilibrium quantity.
Higher demand
It leads to lower equilibrium price and higher equilibrium quantity.
Higher supply
It leads to lower price and lower quantity exchanged.
Lower demand
It leads to higher price and lower quantity exchanged.
Lower supply
It is the ratio of the percentage increase in quantity to the percentage increase in what affects it.
Elasticity
It refers to the ratio between a percentage change in quantity demanded due to a corresponding percentage change in price.
Price Elasticity of Demand
