Demand, Supply, Prices( Econ test 2)

non name brand

Not a normal good

income effect

a change in the quantity demanded caused by a change in the amount of money consumers have as a result of the price of another product increasing or decreasing

excise tax

a government tax on the production or sale of a good

demand curve

a graph showing the quantity demanded at each and every price, which is always downward sloping

subsidy

a payment from the government to a company to encourage production or protect an economic activity

decrease

according to the law of demand, for most products and services an increase in price results in

decrease

according to the law of supply, if the price of DVD's decreases from 18-16 what will happen to the quantity supplied

fixed costs

are the production costs that do not change, which include rent, insurance, property taxes, and salaries of management

downward sloping

demand curve is always

shifts to the right

how does the demand curve show and increse in demand

inelastic

if a consumer cannot postpone the purchase of a product demand tends to be

increase

if there is a shortage in a market the price is likely to

decrease

if there is a surplus in a market the price is likely to

lower price and supply

if there is a surplus of a product made by a company how will they adjust their price and supply

eqilibrium

in a competitive market the price adjustment process moves toward market

demand

in a market economy a high price is a signal for

increasins returns, diminishing returns, negative returns

in what order do the three stages of production occur

supply curve

is a graph that can be used to show the quantities supplied at different prices, which is always upward sloping

elasticity

is a measure of how much a change in price affects quantity supplied/ quantity demanded

shortage

is a situation where quantity demanded is greater than quantity supplied

surplus

is a situation where the quantity supplied is greater than the quantity demanded

the law of demand

more will be purchased at low prices than high prices

law of demand

people will buy more of a good when its price falls and less when the price rises

shortage

price ceilings that are artificially low are likely to create

surplus

price floors that are artificially high are likely to create

equal to marginal revenue

profit is maximized when marginal cost is

marginal cost

profits will be maximized when marginal revenue

law of supply

says that as the price of a goos rises the quantity supplied will rise

upward sloping

supply curve is always

variable cost

the costs of production that can change, which include the costs of raw materials, utilities, and wages of hourly employees

price ceiling

the max amount that can legally be charged for a product

price floor

the minimum amount that can legally be charged for a product is a

increase in unemployment

the minimum wage is an example of a price floor. as a result of supply and demand for labor, an increase in the minimum wage often leads to

equilibrium

the point at which the quantity supplied is equal to the quantity demand is known as

law of supply

the quantity supplied varies in the same direction with its price

more=more

what effect does the availability of many substitues have on elasticity of demand for a good

price goes down

what happens to equilibrium price when supply goes down

inelastic

when a change in price leads to a relatively small change in the quantity purchased, demand is

elastic

when a change in price leads to relatively large change in the quantity produced, supply is

substitution

when consumers purchase alternative products as a result of change in the price of an original product

shoes and socks

which of the following are considered complements

a decrease in the cost of inputs

which of the following can cause an increase in supply

everything except price

which of the following factors can lead to a change in demand

production costs go up

which of the following factors can lead to a decrease in supply

anything but price

which of the following factors causes the demand curve to shift

competition

which of the following is a benefit of the price system

input costs of production

which of the following is not a factor that can cause an increase or decrease in demand

must have

which of the following items has an inelastic demand

price

which of these events would indicate a movement along the supply curve for batteries

decreasing marginal

which stage of production occurs when the quantity produced increases at a decreasing rate