Economics Unit 2- The Market Economy

a relation showing the quantities of a good that consumers are willing and able to buy per period at various prices, other things constant

the quantity of a good demanded per period relates inversely to its price, other things constant

the change in total utility resulting from one-unit change in consumption of a good

the more of a good an individual consumes per period, other things constant, the smaller the marginal utility of each additional unit consumed

a curve or line showing the quantities of a particular good demanded at various prices during a given time period, other things constant

the amount demanded at a particular price

the demand of an individual consumer

the sum of the individual demands of all consumers in the market

measures how responsive quantity demanded is to a price change; the percent change in quantity demanded divided by the percent change in price

price multiplied by the quantity demanded at that price

good for which demand increases as money income increases

good for which demand decreases as money income increases

a consumer’s likes and dislikes

change in quantity demanded resulting from a change in the price of the good, other things constant

increase or decrease in demand resulting from a change in one of the determinants of demand other than the price of the good

total revenue - total cost

a relation showing the quantities of a good producers are willing and able to sell at various prices during a given period, all other things constant

the quantity of a good supplied during a given time period is usually directly related to its price, other things constant

a curve, or line, showing the quantities of a particular good supplied at various prices during a given time period, other things constant

a measure of the responsiveness of quantity supplied to a price change; the percent change in quantity divided by the percent change in price

change in quantity supplied resulting from a change in the price of the good, other things constant

increase or decrease in supply resulting from a change in one of the determinants of supply other than the price of the good

a period during which at lest one of a firm’s resources is fixed

a period during which all of a firm’s resources can be varied

the total output of the firm per period

the change in total product resulting from a one-unit change in a particular resource, all other things constant

as more of a variable resource is added to a given amount of other resources, marginal product eventually declines and could become negative

any production cost that is independent of the firm’s output

any production cost that changes as output changes

the sum of fixed cost and variable cost

the change in total cost resulting from a one-unit change in output; the change in total cost divided by the change in output

the change in total revenue from selling another unit of the good

forces that reduce a firm’s average cost as the firm’s size, or scale, increases in the long run

a curve that indicates the lowest average cost of production at each rate of output when the firm’s size is allowed to vary

when the firm’s long-run average cost increases as production increases

when the quantity consumers are willing and able to buy equals the quantity producers are willing and able to sell

at a given price, the amount by which quantity supplied exceeds quantity demanded; usually forces the price down

at a given price, the amount by which quantity demanded exceeds quantity supplied; usually forces the price up

the costs of time and information needed to carry out market exchange

consumers are willing and able to buy more of the product at each price

consumers are willing and able to buy less of the produt at each price

producers are willing and able to sell more of the product at each price

producers are willing and able to supply less of the product at each price

occurs when a firm produces at the lowest possible cost per unit

occurs when a firm produces the output most values by consumers

a mismatch between quantity demanded and quantity supplied as the market seeks equilibrium; usually temporary, except when the government intervenes to set the price

a minimum legal price below which a product cannot be sold

a maximum legal price above which a product cannot be sold

the difference between the most that consumers are willing and able to pay for a given quantity of a good and what they actually pay

an approach that borrows insights from psychology to help explain economic choices

there are limits to the amount of information people can comprehend and act on

limited self-discipline in following through with decisions that are in one’s self-interest, especially in one’s long-term interest

the mapping of brain activity while subjects make economic choices to develop better models of economic decision making

important features of a market, including the number of buyers and sellers, product uniformity across sellers, ease of entering the market, as well as forms of competition

a market structure with many fully informed buyers and sellers of an identical product and ease of entry

a product that is identical across sellers, such as a bushel of wheat

the sole supplier of a product with no close substitutes

the ability of a firm to raise its price without losing all sales to rivals

restrictions on the entry of new firms into an industry

a market structure with low entry barriers and many firms selling products differentiated enough that each firm’s demand curve slopes downward

a market structure with a small number of firms whose behavior is independent

a group of firms that agree to act as a single monopoly to increase the market price and maximize the group’s profit

government efforts aimed at preventing monopoly and promoting competition in markets where competition is desirable

the joining of two or more firms to form a single firm

a reduction in government control over prices and firm entry in previously regulated markets, such as airlines and trucking