question
law of demand
answer
when price increases, demand decreases
when price decreases, demand increases
when price decreases, demand increases
question
demand schedule
answer
table that lists the amount of a good a person will buy at certain prices
question
income effect
answer
demand of an item will change based on how much a person makes
more money= more likely to buy items
more money= more likely to buy items
question
shifts in the demand curve
answer
1. income, 2. consumer expectations, 3. population (more people=more demand), 4. consumer tastes
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complements
answer
goods that are bought and used together
peanut butter and jelly; butter and bread; shoes and socks
peanut butter and jelly; butter and bread; shoes and socks
question
substitutes
answer
goods used in place of another good
nutella for jelly; ranch for honey mustard
nutella for jelly; ranch for honey mustard
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inelastic demand
answer
demand of a good will stay the same, no matter the price
question
elastic demand
answer
demand of a good will change based on the price
question
law of supply
answer
when price increases, supply increases; when price decreases, supply decreases
question
supply schedule
answer
chart that lists how much of a good will be supplied at different prices
question
shifts of supply curve
answer
1. raw material prices change, 2. labor costs change
question
inelastic supply
answer
supply level will stay the same even if price changes
question
elastic supply
answer
supply levels will change when price changes
question
market equilibrium
answer
point where supply and demand cross; price and quantity point where supply and demand are the same
question
price ceiling
answer
MAXIMUM price a good is allowed to be sold for
drawn BELOW the market equilibrium
drawn BELOW the market equilibrium
question
price floor
answer
MINIMUM price a good can be sold for
drawn ABOVE the market equilibrium
drawn ABOVE the market equilibrium
question
perfect competition
answer
THEORETIC market structure in where a large number of firms all produce the same product
lack an influence in price
lack an influence in price
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pros of perfect competition
answer
1. consumers have perfect knowledge of the market, 2. resources are allocated efficiently
question
cons of perfect competition
answer
1. little incentive to innovate because all markets sell the same thing; 2. profit margins are fixed-- can't make more than others
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monopolistic competition
answer
a market structure in which many companies sell products that are similar but are different due to branding
question
pros of monopolistic competition
answer
1. substitutes are available due to branding; 2. low barriers to enter market
question
cons of monopolistic competition
answer
1. buyers have imperfect information;2. companies with better branding will get more business; 3. new companies can fall behind in competition
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oligopoly
answer
A market structure in which a few large firms dominate a market through cartels and collusion
question
pros of oligopolies and monopolies
answer
1. price stability in the market;2. large scale economies;3. higher profit potential
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monopoly
answer
A market in which there are many buyers but only one seller who control price and output
question
cons of monopolies
answer
customers taken advantage of through price setting, inferior products due to lack of innovation
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collusion
answer
secret agreement or cooperation to fix prices
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cartel
answer
organization of independent businesses or countries that work to regulate the market/fix prices of a certain item
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Sole Proprietorship
answer
A business owned by one person
question
general partnership
answer
partnership in which partners share equally in both responsibility and liability
question
limited partnership
answer
form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business
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corporation
answer
A business owned by stockholders who share in its profits but are not personally responsible for its debts
company has legal rights and own taxes to pay
company has legal rights and own taxes to pay
question
franchise
answer
business that uses an already successful model and customer base to make money
McDonalds, Chickfila
McDonalds, Chickfila
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personal income
answer
money you make BEFORE taxes are taken out/paid
question
disposable income
answer
money you have AFTER taxes are taken out/paid
question
Factors of income
answer
1. How others value what you do; 2. How well you do what you do; 3. How difficult it is to replace you
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Ways to have higher income
answer
1. Go to college;2. Do something no one else wants to do;3. Get a job in the "right" high demand industry
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civilian labor force
answer
non-institutionalized part of the population, aged 16 and over, either working or looking for a job
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unemployment rate
answer
the percentage of the labor force that is unemployed
question
frictional unemployment
answer
unemployment that occurs when people take time to find a job
question
structural unemployment
answer
unemployment due to a change in the economy that results in a change in the demand of workers
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technological unemployment
answer
unemployment caused by technological developments
question
cyclical unemployment
answer
unemployment that is a result of the business cycle-- recession/depression
question
seasonal unemployment
answer
unemployment caused by seasonal changes in the demand for certain kinds of labor
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