Copy of Unit 2 Supply Demand Review Schoology

Law Of Demand

1. Demand - consumer side of things

2. Law of Demand - If prices are low, demand is high; if prices are high, demand is low

3. Substitution effect - dupe for when prices are high

4. Income effect - person’s consumption of goods change when their income changes

5. Law of Diminishing Marginal Utility - the more a person consumes a g/s, they benefit less

6. Demand schedule - table that shows the quantity bought by an individual

7. Market demand schedule - all consumers & the quantity bought

8. Demand curve (inverse relationship) - inverse relationship between price & quantity

9. Ceteris paribus - only price changes

10. Change in Demand - factors that aren’t price related

11. T.R.I.B.E. or T.R.I.P.E.

T - personal tastes

R - related goods

I - income

B - more buyers

E - consumer expectations

12. Normal good - name brands

13. Inferior good - dupes/knock offs

14.Complementary goods - products that are often bought together

15. Substitute goods - goods that can be bought either or

16. Elastic of demand - wants; when price changes, there is great change in demand

17. Inelastic demand - needs; when price changes, there is little change in demand

18. Elasticity of demand - how much a consumer changes their buying habits as a result of a change in price

Law Of Supply

19. Law of supply - relationship between price and quantity supplied

20. Quantity supplied - how much of a good is offered for sale at a given price

21. Supply schedule - chart price listings for individual supplier

22. Market supply schedule - lists how much of a g/s ALL suppliers are willing to offer at different prices

23. Supply curve - relationship between price and supplied quantity

24. Market supply curve - movement along the supply curve

25. Elasticity of supply - measure of the way quantity supplied reacts to a change in price

26. Fixed cost - costs in a business that is constant (ex. weekly payroll)

27. Variable cost - costs that rise & fall (ex. hourly wage)

28. Total cost - FIxed Cost + Variable Cost = Total Cost

29. Law of Increasing Costs - no matter how much is produces, it will always cost more to produce

30. Marginal cost - the change in total production cost that comes from making or producing one additional unit

31. Law of Increasing Opportunity Costs - businesses make choices based on the resources they have available

32. Operating cost - ongoing expenses incurred from the normal day-to-day of running a business

33. Marginal product of labor - change in total product / change in labor

34. Increasing marginal returns - as long as all variables are kept constant, there will be an incremental increase in marginal efficiency

35. Diminishing marginal returns - predicts that after some optimal level of capacity is reached, adding an additional factor of production will actually result in smaller increases in output

36. Negative marginal returns - When additional units of a variable factor reduce total output, given constant quantities of all other factors, the company experiences negative marginal returns.

37. Marginal revenue - increase in revenue that results from the sale of one additional unit of outpu

38. Change in Supply - shifting on the supply curve (usually due to technology, costs, regulations)

39. N.I.C.E.J.A.G.

N - natural/manmade

I - input costs

C - competition

E - expectations

J - complimentary goods

A - substitute of goods

G - government action

40. Excise tax - taxes that are imposed on various goods, services and activities.

41. Regulation - decreases the number of people who can or will legally sell at a given price

42. Subsidy - direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government to achieve greater economic efficiency

Equilibrium

43. Equilibrium - where market & demand meet

44. Disequilibrium - supplied anywhere other than equilibrium

45. Excess demand - market demand for a commodity is greater than its market supply

46. Shortage - quantity supply > quantity demand

47. Excess supply - quantity of a good or service supplied is more than the quantity demanded,

48. Surplus - quantity demand < quantity supply

49. Price ceiling - maximum price that sellers may change, set by the government

50. Rent control - a law placing a “rent ceiling” on what landlords may charge tenants

51. Price floor - minimum price that sellers may change, set by the government

52. Minimum wage - lowest wage per hour that a worker may be paid