Terms : Hide Images
| 8445494347 | Supply | How much of a good or service a producer is willing and able to produce at different prices. | 0 | |
| 8445494348 | Demand | Consumer willingness and ability to buy products | 1 | |
| 8445494349 | Substitution Effect | when consumers react to an increase in a good's price by consuming less of that good and more of other goods | 2 | |
| 8445494350 | Income Effect | A change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product's price. | 3 | |
| 8445494351 | Price Elasticity of Demand | A measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price | 4 | |
| 8445494352 | Law of Demand | consumers buy more of a good when its price decreases and less when its price increases | 5 | |
| 8445494353 | Midpoint Method | a technique for calculating the percent change in which changes in a variable are compared with the average, or midpoint, of the starting and final values. | 6 | |
| 8445494354 | Perfectly Inelastic | The case where the quantity demanded is completely unresponsive to price, and the price elasticity of demand equals zero. |  | 7 |
| 8445494355 | Perfectly Elastic | In the extreme situation where a small price reduction causes buyers to increase their purchases from zero to all they can obtain. Thus the coefficient is infinite. |  | 8 |
| 8445494356 | Unit Elasticity | a demand relationship in which the percentage change in quantity of a product demanded is the same as the percentage change in price in absolute value (a demand elasticity of -1) | 9 | |
| 8445494357 | Total Revenue | the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold | 10 | |
| 8445494358 | Price Effect | inclination of people to buy less of something at higher prices than they would buy at lower prices | 11 | |
| 8445494359 | Quantity Effect | after a price increase, fewer units are sold, which tends to lower revenue | 12 | |
| 8445494360 | Elastic | A measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants | 13 | |
| 8445494361 | Inelastic | Describes demand that is not very sensitive to price changes | 14 | |
| 8445494362 | Cross-Price Elasticity of Demand | Ex,y = (%dQd good X) / (%d Price Y). If Ex,y > 0, goods X and Y are substitutes. If Ex,y < 0, goods X and Y are complementary | 15 | |
| 8445494363 | Income Elasticity of Demand | Income Elasticity of Demand: The income elasticity of demand measures the impact of a consumer's income on his or her demand for a product. If the product is a normal good, the income elasticity of demand will be a positive number; if the product is an inferior good, the income elasticity of demand will be a negative number. If income has a strong impact on the consumer's demand for the product, the income elasticity of demand will be a large number in absolute value; if income has a weak impact on the consumer's demand for the product, the income elasticity of demand will be a small number in absolute value. | 16 | |
| 8445494364 | Price Elasticity of Supply | A measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price | 17 | |
| 8445494365 | Perfectly Inelastic Supply |  | 18 | |
| 8445494366 | Perfectly Elastic Supply |  | 19 | |
| 8445494367 | Consumer Surplus | The amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it |  | 20 |
| 8445494368 | Producer Surplus | The amount a seller is paid for a good minus the seller's cost of providing it | | 21 |
| 8445494369 | Total Surplus | Consumer Surplus + Producer Surplus |  | 22 |
| 8445494370 | Progressive Tax | A tax for which the percentage of income paid in taxes increases as income increases | 23 | |
| 8445494371 | Regressive Tax | A tax whereby people with lower incomes pay a higher fraction of their income than people with higher incomes. | 24 | |
| 8445494372 | Proportional Tax | A tax in which the average tax rate is the same at all income levels. | 25 | |
| 8445494373 | Excise Tax | A tax levied on a particular good or service - federal excise tax on gasoline. | 26 | |
| 8445494374 | Average Tax Rate | Total taxes paid divided by total income | 27 | |
| 8445494376 | Marginal Tax Rate | The rate at which the tax is paid on each additional unit on taxable income | 28 | |
| 8445494377 | Tax Incidence | The actual division of the burden of a tax between buyers and sellers in a market. | 29 | |
| 8445494378 | Deadweight Loss | The decrease in total surplus that results from an inefficient underproduction or overproduction. | 30 | |
| 8445494379 | Lump Sum Tax | a tax that is a constant amount (the tax revenue of government is the same) at all levels of GDP | 31 | |
| 8445494380 | Per Unit Tax | a tax of a specific amount on each unit of a product sold | 32 | |
| 8445494381 | Utility | Ability or capacity of a good or service to be useful and give satisfaction to someone. | 33 | |
| 8445494382 | Marginal Utility | (economics) the amount that utility increases with an increase of one unit of an economic good or service | 34 | |
| 8445494383 | Diminishing Marginal Utility | the principle that our additional satisfaction, or our marginal utility, tends to go down as more and more units are consumed | 35 | |
| 8445494384 | Marginal Utility per Dollar | the marginal utility from a good that results from spending one more dollar on it | 36 | |
| 8445494385 | Optimal Consumption | the consumption bundle that maximizes the consumer's total utility given his or her budget constraint | 37 | |
| 8445494386 | Explicit Cost | Input costs that require an outlay of money by the firm (e.g. rent). Money that actually leaves a firm in the productive process. | 38 | |
| 8445494387 | Implicit Cost | Input costs that do not require an outlay of money by the firm (e.g. interest forgone on money used). The opportunity costs associated with a firm's use of resources that it owns. | 39 | |
| 8445494388 | Accounting Profit | A firm's total revenue minus its explicit costs | 40 | |
| 8445494389 | Economic Profit | Total revenue minus total cost, including both explicit and implicit costs | 41 | |
| 8445494390 | Normal Profit | Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources | 42 | |
| 8445494391 | Marginal Analysis | Analysis that involves comparing marginal benefits and marginal costs. | 43 | |
| 8445494392 | Marginal Revenue | Change in revenue resulting from a one-unit increase in output | 44 | |
| 8445494393 | Optimal Output Rule | profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost | 45 | |
| 8445494395 | Marginal Cost Curve | a graphical representation showing how the cost of producing one more unit depends on the quantity that has already been produced |  | 46 |
| 8445494396 | Marginal Revenue Curve | a graphical representation showing how marginal revenue varies as output varies. |  | 47 |
| 8445494398 | Fixed Input | an input whose quantity is fixed for a period of time and cannot be varied | 48 | |
| 8445494399 | Variable Input | an input whose quantity the firm can vary at any time | 49 | |
| 8445494400 | Long run | A period of sufficient time to alter all factors of production used in the productive process - all inputs can be changed. | 50 | |
| 8445494401 | Short run | A period during which at least one of a firm's resources is fixed | 51 | |
| 8445494402 | Total Product Curve | shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input |  | 52 |
| 8445494403 | Marginal Product | Extra output due to the addition of one more unit of input | 53 | |
| 8445494404 | Production Function | The relationship between quantity of inputs used to make a good and the quantity of output of that good |  | 54 |
| 8445494405 | Fixed Cost | Costs that do not vary with the quantity of output produced | 55 | |
| 8445494406 | Variable Cost | Costs that vary with the quantity of output produced | 56 | |
| 8445494407 | Total Cost | Fixed Cost + Variable Cost | 57 | |
| 8445494408 | Total Cost Curve | shows how total cost depends on the quantity of output |  | 58 |
| 8445494409 | Marginal Cost | Extra cost of producing one additional unit of production. | 59 | |
| 8445494410 | Average Cost | The total cost divided by the quantity produced. | 60 | |
| 8445494411 | Average Fixed Cost | Fixed cost divided by the quantity of output |  | 61 |
| 8445494412 | Average Variable Cost | The variable cost per unit produced | 62 | |
| 8445494413 | U Shaped Total Cost Curve |  | 63 | |
| 8445494414 | Minimum Efficiency Scale | the lowest level of output at which a firm can minimize long run ATC |  | 64 |
| 8445494415 | Long Run Average Total Cost Curve | A curve that indicates the lowest average cost production at each rate output when size or scale of the firm varies. It is also called the planning curve. | 65 | |
| 8445494417 | Increasing Returns to Scale | When long-run average total cost declines as output increases. Economies of scale outweigh diseconomies of scale | 66 | |
| 8445494418 | Diseconomies of Scale | Increases in the average total cost of producing a product as the firm expands the size of its plant (its output) in the long run. | 67 | |
| 8445494419 | Decreasing Returns to Scale | when long-run average total cost increases as output increases: diseconomies of scale outweigh economies of scale | 68 | |
| 8445494420 | Constant Returns to Scale | A situation in which the long-run total cost increases proportionately with output, so average cost is constant | 69 | |
| 8445494422 | Perfectly Competitive Market | A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. | 70 | |
| 8445494423 | Market Share | A company's product sales as a percentage of total sales for that industry | 71 | |
| 8445494424 | Monopoly | A firm that is the sole seller of a product without close substitutes | 72 | |
| 8445494425 | Monopsonist | a firm that has market power in the factor market, i.e., a wage-setter. | 73 | |
| 8445494426 | Barrier of Entry | something that prevents other firms from entering an industry. Crucial in protecting the profits of a monopolist. There are four types of barriers to entry: control over scarce resources or inputs, increasing returns to scale, technological superiority, and government-created barriers such as licenses. | 74 | |
| 8445494427 | Natural Monopoly | A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms | 75 | |
| 8445494428 | Economies of Scale | Factors that cause a producer's average cost per unit to fall as output rises | 76 | |
| 8445494429 | Patent | A document granting an inventor sole rights to an invention | 77 | |
| 8445494430 | Copyright | a document granting exclusive right to publish and sell literary or musical or artistic work | 78 | |
| 8445494431 | Imperfectly Competitive Market | markets where individual buyers or sellers can control or influence the price | 79 | |
| 8445494432 | Oligopoly | A market in which control over the supply of a commodity is in the hands of a small number of producers and each one can influence prices and affect competitors. A market structure in which a few large firms dominate a market. | 80 | |
| 8445494433 | Concentration Ratio | The percentage of industry sales (or assets, output, labor force, or some other factor) accounted for by x number of firms in the industry. | 81 | |
| 8445494434 | Monopolistic Competition | A market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products. | 82 | |
| 8445494435 | Profit Maximizing Output | MR=MC | 83 | |
| 8445494436 | Break Even Price | The price at which economic profit is zero; price equals average total cost | 84 | |
| 8445494437 | Shut Down Price | the price where average revenue is equal to average variable cost. Below this price, the firm will shut down in the short run | 85 | |
| 8445494438 | Short Run Industry Supply Curve | a curve that shows the quantity a firm supplies at each price in the short run; in perfect competition, that portion of a firm's marginal cost curve that intersects and rise above the low point on its average variable cost curve | 86 | |
| 8445494439 | Long Run Industry Supply Curve | a curve that shows how the quantity supplied by an industry varies as the market price varies after all the possible adjustments have been made, including changes in plant size and the number of firms in the industry | 87 | |
| 8445494440 | P = MC | Allocative efficiency | 88 | |
| 8445494441 | Price Discrimination | the business practice of selling the same good at different prices to different customers | 89 | |
| 8445494442 | Perfect Price Discrimination | Occurs when a firm charges the maximum amount that buyers are willing to pay for each unit. | 90 | |
| 8445494443 | Duopoly | Exists when two companies dominate a market. | 91 | |
| 8445494444 | Collusion | An agreement among firms to divide the market, set prices, or limit production | 92 | |
| 8445494445 | Cartel | A group of firms that collude by agreeing to restrict output to increase prices and profits. | 93 | |
| 8445494446 | Game Theory | An approach to evaluating alternative strategies in situations where the outcome of a particular strategy depends on the strategies used by other individuals. | 94 | |
| 8445494447 | Prisoners Dilemna | A model used to help show how two interdependent firms may rationally produce where both firms are worse off if collusion does not take place | 95 | |
| 8445494448 | Dominant Strategy | A strategy that is best for a player in a game regardless of the strategies chosen by the other players | 96 | |
| 8445494449 | Nash Equilibrium | A situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen | 97 | |
| 8445494450 | Tacit Collusion | when firms limit production and raise prices in a way that raises each others' profits, even though they have not made any formal agreement | 98 | |
| 8445494451 | Antitrust Laws | Laws designed to promote competition and fairness to prevent monopolies | 99 | |
| 8445494452 | Price Leadership | The strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow. | 100 | |
| 8445494453 | Excess Capacity | The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment | 101 | |
| 8445494454 | Physical Capital | Man-made factors of production such as machinery, factories, roads, etc. | 102 | |
| 8445494455 | Human Capital | An organization's employees, described in terms of their training, experience, judgment, intelligence, relationships, and insight. | 103 | |
| 8445494456 | Derived Demand | Business demand that ultimately comes from the demand for consumer goods | 104 | |
| 8445494457 | Factor Distribution of Income | the division of total income among labor, land, and capital | 105 | |
| 8445494459 | Diminishing Marginal Product | A level of production in which the marginal product of labor decreases as the number of workers increases; (Gets less additional usefulness) | 106 | |
| 8445494460 | Value of the Marginal Product | the marginal product of an input times the price of the output | 107 | |
| 8445494461 | Marginal Productivity Theory of Income Distribution | Firms in competitive or perfect product and factor markets pay factors their marginal revenue products. | 108 | |
| 8445494462 | MRPL | P*MPL; value firm places on marginal worker; demand curve for labor | 109 | |
| 8445494463 | MFCL | For a competitive labor market, what is the firms MFC of an additional unit of labor? | 110 | |
| 8445494464 | Cost Minimizing Rule | Marginal product per dollar spent on each factor is the same. | 111 | |
| 8445494465 | Efficiency Wages | above-equilibrium wages paid by firms to increase worker productivity | 112 | |
| 8445494466 | Marginal Social Cost | The extra cost to society of producing an additional unit of output, including both the private cost and the external costs. | 113 | |
| 8445494467 | Marginal Social Benefit | The extra benefit or utility to society of consuming an additional unit of output, including both the private benefit and the external benefits. | 114 | |
| 8445494468 | Negative Externalities | a cost imposed without compensation on third parties by the production or consumption of sellers or buyers. Example: a manufacturer dumps toxic chemicals into a river, killing the fish sought by sports fishers; an external cost or a spillover cost | 115 | |
| 8445494469 | Positive Externalities | a benefit obtained without compensation by third parties from the production or consumption of sellers or buyers. Example: A beekeeper benefits when a neighboring farmer plants clover. An external benefit or a spillover benefit. | 116 | |
| 8445494471 | Internalizing the Externality | altering incentives so that people take account of the external effects of their actions | 117 | |
| 8445494476 | Excludable | the property of a good whereby a person can be prevented from using it | 118 | |
| 8445494477 | Rival | A good is this if one person's use of it decreases the quantity available for someone else. | 119 | |
| 8445494478 | Private Good | Goods that are both excludable and rival in consumption | 120 | |
| 8445494479 | Public Good | Goods that are neither excludable nor rival in consumption | 121 | |
| 8445494480 | Common Resource | Goods that are rival in consumption but not excludable | 122 | |
| 8445494481 | Artifically Scarce Goods | A good that is excludable but nonrival in consumption. | 123 | |
| 8445494487 | Marginal Cost Pricing | A system of pricing in which the price charged is equal to the opportunity cost to society of producing one more unit of the good or service in question. The opportunity cost is the marginal cost to society. | 124 | |
| 8445494488 | Average Cost Pricing | setting price equal to average total cost | 125 | |
| 8445494489 | Lorenz Curve | Graph showing how much the actual distribution of income differs from an equal distribution |  | 126 |
| 8445494490 | Gini Coefficient | A measure of income inequality within a population, ranging from zero for complete equality, to one if one person has all the income. | 127 | |
| 8445494491 | Negative Income Tax | a tax system that collects revenue from high-income households and gives subsidies to low-income households | 128 |
