Chapter 5 Econ. Vocabulary

Quantity demanded

________ is the amount of a good or service that consumers are willing and able to buy at a specific price.

Demand

________ is the amount of a good or service that consumers are willing and able to buy at all prices in a given period.

Demand schedule

Economists call this kind of table a ________. An individual ________ lists the quantities of a good that one person will buy at various prices.

Demand curve

A ________ shows the relationship between price and the quantity that buyers are willing and able to buy.

Market demand

________ is the sum of all the individual quantities demanded in a market. When economists refer to demand, they are usually talking about ________.

Law of demand

As the price decreases, the quantity demanded increases and vice versa. Price and quantity demanded move in opposite directions. This inverse relationship between price and quantity demanded is so strong that economists refer to it as the ________. "Most famous law in economics, and the one that economists are most sure of." Consumers are happier to buy goods and services at lower prices than at higher prices.

Substitute good

Sometimes two different goods can satisfy the same want. Such products are called ________. A product that satisfies the same basic want as another product.

Ex: Rubber flip-flops can satisfy the same want as leather sandals.

Change in quantity demanded

As consumers buy more in response to a decrease in price - or less in response to an increase in price - the quantity demanded is said to "move along the demand curve." Economists call this movement along the curve a ________. Only a change in price causes a change in quantity demanded.

Change in demand

But sometimes a factor other than price - such as a spike or drop in the number of customers - causes an entire demand curve to shift to a new position on the graph. Economists call this shift a ________. A ________ occurs when quantities demanded increase or decrease at all prices.

Demand shifters

Economists have identified several ________ that can cause a change in demand for a good or service.

Complementary good

A ________ is a product that is consumed along with some other product. Usually has more value when paired with another product than when used seperately.

EX: Tennis rackets and tennis balls.

Quantity supplied

________ is the amount of a good or service that producers are willing and able to offer for sale at a specific price.

Supply

________ is the amount of a good or service that producers are willing and able to offer for sale at all prices in a given period. ________ is always expresses in terms of a specific time period, such as weeks or months.

Supply schedule

A ________ is a table that shows the quantities supplied at different prices in a market.

Supply curve

A ________ shows the relationship between the price and the quantity that producers are willing and able to supply.

Market supply

________ is the sum of all the individual quantities supplied. When economists refer to supply, they are usually talking about ________.

Law of supply

As the price decreases, the quantity supplied decreases and vice versa. Price and quantity move in the same direction. Economists refer to this direct relationship as the ________. The ________ holds true as long as all other influences on supply remain constant. Generally, producers are happier to offer goods and services at higher prices than at lower prices.

Revenue

Firms earn profits based partly on ________, the amount of money received in the course of doing business. Calculated by multiplying the quantity sold by the price.

Change in quantity supplied

As producers supply more at higher prices, and less at lower prices, the quantity supplied is said to "move along the curve." This movement along the curve is called ________.

Change in supply

Such as change in the number of producers can cause market supply at all prices to increase or decrease. Economists call this a ________.

Supply shifters

Economists point to several factors that can cause a change in supply of a good or service. ________ can cause an increase or decrease in supply at every point along a supply curve.

Subsidy

________ - a cash payment aimed at helping a producer to continue to operate.

Excise tax

An ________ is a tax on the manufacture or sale of a good. It adds to the production cost of every unit produced, thereby causing supply to decrease.

Elasticity

Economists define ________ as the degree to which a quantity demanded or a quantity supplied changes in response to a change in price.

Elasticity of demand

Economists since Marshall have referred to _________ as a measure of consumers' sensitivity to a change in price.

Inelastic

The demand for necessities like toothpaste tends to be ________, meaning that it responds slightly or not at all to a change in price.

Elastic

Your demand in this case would be ________, or responsive to a change in price.

Case: Favorite energy bar is marked up by 50%, you might decide to buy something else instead.

Unitary elastic demand

________ occurs when the percentage change in price exactly equals the percentage change in quantity demanded.

Total revenue test

To gauge the impact of prices on their revenue, producers use a business tool known as the ________.

Revenue table

A ________ lists the possible prices for a given product and the market demand at each price.

Total revenue

_________ is calculated by multiplying the quantity of a good sold by the price of the good.

Elasticity of supply

________ is a measure of the sensitivity of producers to a change in price. It tells economists how much a producer will change the quantity supplied in response to a change in price.

Unitary elastic supply

If the result is exactly 1 - the percentage change in price equals the percentage change in quantity supplied - the result is ________.

Supply chain

The ________ is the network of people, organizations, and activities involved in supplying goods and services to consumers.