VOCABULARY REVIEW CHAPTERS 4-6

Vocabulary Chapter 4 ____________ is the amount of money a firm receives by selling its goods. Total revenue When the percentage of change in demand is exactly equal to the percentage of change in price the elasticity of demand is said to be ______. unitary

When the demand for a good is _______ you will keep buying it despite a price increase. Inelastic _____________ describes how consumers will react to a change in the price of a good. Elasticity of demand Your demand for a good that you will NOT keep buying with a price increase or you will buy less is considered ____________. Elastic

A ___________ is a product that consumers demand more of when their income is up. Normal good _____________ is the assumption that all other things except price are held constant in a demand schedule. Ceteris paribus A product that you would buy in smaller quantities are not at all if your income rise are called ____________. Inferior goods

A _____________ on a demand curve involves factors other than price Demand Shift two goods that are bought together are call ____________. Complements __________ are goods used in place of one another. substitutes

The _____________ is when consumers react to an increase in a good’s price by consuming less of that good and more of the other goods. Substitution effect A _________ is a table that lists the quantity of a good that ALL consumers in a market will buy at each different price. Market demand schedule A __________ is a graphic representation of a demand schedule. Demand curve

____________ describes how much of a good is offered for sale at a specific price. –Quantity supplied A ________ is a graph of the data in a supply schedule. –Supply curve _________________ are the factors that can change. –Variables If a producer can change his production to take advantage of a price increase the supply is __________.

The _____________ is when there is a change in consumption resulting from a change in factor payments. Income effect _________ is the desire to own something and the ability to pay for it. demand The __________ states consumers will buy more of a good when the price decreases and less when the price increase. Law of Demand

___________ is the amount of goods available. –supply The _________________ states, the higher the price the larger the quantity produced. –Law of supply

A __________________________ is a graph of the quantity of a good supplied by all suppliers at different prices. –Market supply curve. A government payment that supports a business or market is called a ______. –Subsidy An _________ is a tax on the production or sale of a good. –Excise tax

A cost that does not change no matter how much goods are produced is known as a ________________. –Fixed cost A ________________ is a chart that lists how much of a good a supplier will offer at different prices. –Supply schedule

_____________ is when any quantity supplied is not equal to quantity demanded. –Disequilibrium ________ occurs when the quantity demanded is more than the quantity supplied. –Excess demand A price ceiling placed on rent is called ___ –Rent control

__________ occurs when the quantity supplied exceeds the demand. –Excess supply A _____________ is a sudden shortage of a good. –Supply shock ___________ is the dividing up of goods and services using criteria other than price. –rationing A _________ is a market that allows consumers to pay more so they can buy a good when rationing makes it otherwise unavailable. –Black market

_____________________ is the amount it takes to run a facility such as a factory or store. –Operating costs __________________ is the additional income from selling one more unit of a good equal to the price. –Marginal revenue A _____________________________ is a chart that list how much of a good all suppliers will offer at different prices. –Market supply schedule

The point where supply and demand come together at the same number is called _____. –Equilibrium _________ are maximum prices that can legally be charged for a good. –Price Ceilings ________are the minimum prices that can be charged (minimum wages) –Price Floors

If a producer can change his production to take advantage of a price increase the supply is __________. –Elastic __________measures the way suppliers respond to a change in prices. –Elasticity of supply __________ is the change in output from hiring one more worker. –Marginal product of labor

_______________________ occurs when a level of production in which the marginal product of labor decreases as the number of workers increase. –Diminishing marginal returns ___________________ is the additional cost to produce one more unit. –Marginal costs The fixed costs and variables costs added together determine the _______________. –Total costs

_____________ are costs of production that affect people who have no control over how much of a good is produced. –Spillover costs / externality _______________________ is a level of production in which the marginal product of labor goes up as the number of workers go up. –Increasing marginal return