Economics - Unit 2 IDs

Market structure

How an industry is organized based on the number of firms and the level of competition.

Microeconomics

The study of how individuals and businesses make decisions about limited resources.

Demand curve

A graph showing the relationship between a product’s price and the quantity consumers are willing to buy.

Inversely

When one variable moves in the opposite direction of another.

Law of Demand

As price goes up, quantity demanded goes down (and vice versa).

Marginal Utility

The extra satisfaction gained from consuming one more unit of a good.

Diminishing marginal utility

Each additional unit of good gives less added satisfaction than the previous one.

Change in quantity demanded

Movement along the demand curve caused by a change in price.

Income effect

When a change in price makes consumer feel richer or poorer, affecting how much they buy.

Change in demand

A shift of the entire demand curve caused by factors other than price (like income or tastes).

Rebate

A partial refund given after a purchase

Substitutes

Goods that can replace each other

Complements

Goods that are used together

Elasticity

A measure of how much quantity demanded or supplied responds to a change in price.

Supply

The amount of a product that producers are willing to sell at different prices.

Law of Supply

As price increases, quantity supplied increases.

Supply curve

A graph showing the relationship between price and quantity supplied.

Quantity supplied

The amount of a good producers are willing to sell at a specific price.

Change in quantity supplied

Movement along the supply curve caused only by a change in price.

Change in supply

A shift of the entire supply curve due to factors other than price (like technology or input costs).

Subsidy

A government payment to producers to lower costs and encourage production.

Production function

Shows how inputs (like labor and capital) are turned into outputs.

Short run

A period where at least one input is fixed and cannot be changed.

Long run

A period where all inputs can be changed.

Total product

The total amount of output produced with given inputs.

Marginal Product

The extra output produced by adding one more unit of input.

Diminishing returns

When adding more of an input eventually produces smaller increases in output.

Fixed costs

Costs that do not change with the level of output (like rent).

Variable costs

Costs that change with the level of output (like raw materials).

Total cost

The sum of fixed and variable costs

Total revenue

The total money a firm earns

Marginal Revenue

The extra revenue from selling one more unit

Break-even point

The level of output where total revenue equals total cost.

Price

The amount of money exchanged for a good or service.

Equilibrium price

The price where quantity demanded equals quantity supplied.