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Details Title: Chapter 3 Key Terms Description: Vocabulary for Chapter 3 of CASE & FAIR Total Flash Cards: 35 Created: 01/31/2007 00:53:47	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term firm Definition an organization that transforms resources (inputs) into products (outputs). Firms are the primary producing units in a market economy Term entrepreneur Definition a person who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product iand turning it into a successful business Term households Definition the consuming units in an economy Term product or output markets Definition the markets in which goods and services are exchanged Term input of factor markets Definition the markets in which the resources used to produce products are exchanged Term labor market Definition the input / factor market in which households supply work for wages to firms that demand labor Term capital market Definition the input / factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods Term land market Definition the input / factor market in which households supply land or other real property in exchange for rent Term factors of production Definition the inputs into the land production process. land, labor, and capital are the three key factors of production Term quantity demanded Definition the amount (number of units) of a product that a household would buy in a given period if it could buy all it wanted at the current market price Term demand schedule Definition a table showing how much of a given product a household would be willing to buy at different prices Term demand curve Definition a graph illustrating how much of a given product a household would be willing to buy at different prices Term law of demand Definition the negative relationship between price and quantity demanded: as price rises, quantity demanded increases. As price fails, quantity demanded increases Term utility Definition happiness or satisfaction Term income Definition the sum of all a household's wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time. it is a flow measure Term wealth or net worth Definition the total value of what a household owns minus what it owes. it is a stock measure Term normal goods Definition goods for which demand goes up when income is higher and for which demand goes down when income is lower Term inferior goods Definition goods for which demand tends to fall when income rises Term substitutes Definition goods that can serve as replacements for one another; when the price of one increases, demand for the other goes up Term perfect substitutes Definition identical products Term complements, complementary goods Definition goods that "go together"; a decrease in the price of one results in an increase in demand of the other, and vice versa Term shift of a demand curve Definition the change that takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and price of that good. the shift is brought about by a change in the original conditions Term movement along a demand curve Definition the change in quantity demanded brought about by a change in price Term market demand Definition the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service Term profit Definition the difference between revenues and costs Term quantity supplied Definition the amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period Term supply schedule Definition a table showing how much of a product firms will sell at different prices Term law of supply Definition the positive relationship between price and quantity of a good supplied: an increase in market prices will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied. Term supply curve Definition a graph illustrating how much of a product a firm will sell at different prices Term movement along a supply curve Definition the change in quantity supplied brought about by a change in price Term shift of a supply curve Definition the change that takes place in a supply curve corresponding to a new relationship between quantity supplied of a good and the price of that good. the shift is brought about by a change in the original conditions Term market supply Definition the sum of all that is supplied each period by all producers of a single product Term equilibrium Definition the condition that exists when quantity supplied and quantity demanded are equal. at equilibrium, there is no tendency for price to change Term excess demand or shortage Definition the condition that exists when quantity demanded exceeds quantity supplied at the current price Term excess supply or surplus Definition the condition that exists when quantity supplied exceeds quantity demanded at the current price