5 March Economics Quiz Study Guide Flashcards Set

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Flashcard 1:

• Term: Supply and Demand

• Definition: Tied to one another

Flashcard 2:

• Term: Law of Demand

• Definition: Prices up, Demand down & Prices down, Demand up

Flashcard 3:

• Term: Substitution Effect

• Definition: An increase in a good’s price by consuming less of that good and more of other goods

Flashcard 4:

• Term: Elastic Demand

• Definition: Demand changes a lot in price

• Examples: Pizza, newest shoes

Flashcard 5:

• Term: Inelastic Demand

• Definition: Demand changes very little with a change in price

• Examples: Baby formula, medicine, gas

Flashcard 6:

• Term: Diminishing Marginal Utility

• Definition: The more you consume of a good, the less additional satisfaction you get from each extra unit

Flashcard 7:

• Term: Law of Supply

• Definition: More will be supplied as prices increase

Flashcard 8:

• Term: Elasticity of Supply

• Definition: The degree to which a change in price will change the supply

• Examples: Pizza

Flashcard 9:

• Term: Inelastic Supply

• Definition: The supply will go up and down very little with change in price

• Examples: Cars, apples

Flashcard 10:

• Term: Change in Costs of Production

• Definition: If a producer can find a cheaper way to produce an item, its supply curve will shift to the right

• Examples: Humans writing books vs. computers printing books

Flashcard 11:

• Term: Subsidies

• Definition: Government payment that supports a business or market

• Effect: Can cause the supply of a good to increase

Flashcard 12:

• Term: Taxes

• Definition: Government can reduce the supply of some goods by placing an excise tax on them

• Examples: Excise tax = tax on the production or sale of a good

Flashcard 13:

• Term: Regulation

• Definition: Occurs when the government steps into a market to affect the price, quantity, or quality of a good

• Effect: Usually raises costs

Flashcard 14:

• Term: Market Price

• Definition: Equilibrium price, bought and sold price

Flashcard 15:

• Term: Price Ceiling

• Definition: Cannot charge more than a certain amount

Flashcard 16:

• Term: Price Floor

• Definition: Cannot charge less than a certain amount

• Purpose: To keep competition fair

Flashcard 17:

• Term: Monopoly

• Definition: Company takes control of entire supply

Flashcard 18:

• Term: Surplus

• Definition: More supply than demand, excessive products

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