Economy Topic 3 Quiz

*Demand – the desire to own something and the ability to buy it

*Law of Demand – consumers will buy more of  a good when its price is lower and less when its price is higher

Substitutes –goods that are used in place of one another

Demand Schedule – a table that lists the quantity of a good that a peson will purchase at various prices in a market

*Market Demand schedule – a table that lists the quantities demanded of a good at various prices by all consumers in the market

Ceteris Paribus – a latin phrae that means “all other things held constant”

Inferior Goods – a good that consumers demand less of when their incomes increase

Complements – two goods that are bought and used together

*Demand Elasticity – how sensitive a products demand is based on price

*Inelastic – describes demand that is not very sensitive to price changes

*Total Revenue – the total amount of money a company receives by selling goods and services

*Supply – the amount of a good or service that is available

*Law of Supply - producers offer more of a good or service as its price increases and less as its price falls

Supply Schedule – a chart that lists how much of a good or service a supplier will offer at various prices

*Supply Curve – a chart that lists how much of a good or service a supplier will offer at various prices

*Profit – the amount of mone a business receives in excess of its expenses

*Elasticity of Supply – a measure of the way quantity reacts to a change in price

Marginal Product of Labor – the change in output that results from hiring one additional unit of labor

*Increasing Marginal Return - the level of production in which the marginal product of laor increases as the number of workers increases

*Diminishing Marginal Return - the level of production in which the marginal product of labor decreases as the number of workers increases

*Negative Marginal Return – when the addition of a unit of labor actually reduces total output

Fixed Costs – a cost that does not change no matter how much of a good or service is produced

Variable Costs – a cost that rises or falls depending on the quantity produced

Total Cost – the su of fixed costs and variable costs

Average Total Cost – total cost dived by quantity produced

*Marginal Cost – the extra cost of adding one unit

Marginal Revenue – the additional income from selling one more unit of a good or service sometimes equal to price

Marginal Benefit – the extra benefit of adding one unit

*Operating Cost – the cost of operating a facility such as a factory or a store

*Subsidy – a government payment that support a business or market

Excise Tax – a tax on the total value of the money and property of a person who has died

Regulation – government intervention in a market that affects the production of a good

*Surplus – when quantity supplied is more than quantity demanded

Shortage – when quantity demanded is more than quantity supplied

*Equilibrium Price – price in which demand and supply are equal

*Price Ceiling – a maximum price that can legally be charged for a good or service

*Price Floor – a minimum price for a good or service

Black Market – a market in which goods ar sold illegally, without regard for government controls on price or quantity