law of demand
economic rule stating that the quantity demanded and price move in opposite directions
quantity demanded
the amount of a good or service that a consumer is willing and able to purchase at a specific price
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law of diminishing marginal utility
rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased
demand curve
downward-sloping line that shows in graph form the quantities demanded at each possible price
price elasticity of demand
economic concept that deals with how much demand varies according to changes in price
law of supply
economic rule stating that price and quantity supplied move in the same direction
law of diminishing returns
economic rule that says as more units of a factor of production area added to other factors of production, after some point total output continues to increase but at a diminishing rate
supply curve
upward-sloping line that shows in graph form the quantities supplied at each possible price
equilibrium price
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
surplus
situation in which quantity supplied is greater than quantity demanded at the current price
shortage
situation in which the quantity demanded is greater than the quantity supplied at the current price
Choice is a basic what in economics?
concept
In a market economy, producers and consumers what that the market generally will take care of itself?
assume
A demand schedule shows the quantities of a good or service that will be demanded at what prices?
specific
Opening a business requires careful what of the market of your potential product or service?
analysis
if the government should what more taxes, businesses will supply less at all prices because the cost of production will rise?
impose
In the case of supply, the higher the price of a good, the greater the what is for a producer to produce more?
incentive
If the price of your favorite soft drink goes up, you may choose to purchase a what brand?
alternate
If a surplus exists in the marketplace, a movement toward the equilibrium price will what the surplus?
eliminate
A demand schedule shows data about prices and quantities demanded in a what way?
visual
What is the basis of most activity in a market economy?
The principal of voluntary exchange
What happens to the quantity demanded when the price of a good goes up and other prices stay the same?
Quantity demanded of that good generally goes down
What is the distinction between elastic and inelastic demand?
Consumers respond more to the price of change of goods with elastic demand, while goods with inelastic demand are less responsive to price change
What happens to the demand curve when income and population increase?
It shifts to the right
What happens when the price of an item goes up?
Supplies tend to produce more goods thereby increasing their profit margin
What will an increase in taxes cause the supply curve to do?
Shift to the left, indicating a decrease in supply
What results when the price of a product is above its equilibrium price?
A surplus
What are the determinants of supply?
Price of Inputs, Number of Firms in the Industry, Taxes, Technology
What are the determinants of demand?
Changes in population, changes in income, changes in tastes and preferences, substitutes, and complementary goods