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AP ECON PRODUCT MARKETS
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18
Economics
12th Grade
04/30/2012

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Term
Elastic Demand
Definition
Product or resource demand whose price elasticity is greater than one.
Term
Inelastic Demand
Definition
Product or resource demand for which the elasticity coefficient for price is less than 1.
Term
Perfectly Elastic Demand
Definition
Product or resource demand in which quantity demanded can be of any amount at a particular product price.
Term
Perfectly Inelastic Demand
Definition
Product or resource supply in which price can be of any amount at a particular quantity of the product or resource demanded.
Term
Consumer Surplus
Definition
The difference between the maximum price a consumer is willing to pay for an additional unit of a product and its market price.
Term
Producer Surplus
Definition
The difference between the actual price a producer receives and the minimum acceptable price.
Term
Law of Diminishing Marginal Utility
Definition
The principle that as a consumer increase the consumption of a good or service, the marginal utility obtained from each additional unit of the good or service decreases.
Term
Utility
Definition
The want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service.
Term
Marginal Utility
Definition
The extra utility a consumer obtains from the consumption of 1 additional unit of a good or service.
Term
Income Effect
Definition
A change in the quantity demanded of a product that results from the change in real income caused by a change in the products price.
Term
Substitution Effect
Definition
The effect of a change in the price of a resource on the quantity of the resource employed by a firm, assuming no change in its output.
Term
Opportunity Cost
Definition
The amount of other products that must be sacrificed to produce a unit of a product.
Term
Explicit Costs
Definition
The monetary payment a firm must make to an outsider to obtain a resource.
Term
Implicit Costs
Definition
The monetary income a firm sacrifices when it uses a resource it owns rather than supplying the resource in the market.
Term
Marginal Product
Definition
The additional output produced when 1 additional unit of a resource is employed.
Term
Fixed Costs
Definition
Any cost that in total does not change when the firm changes its output.
Term
Variable Cost
Definition
A cost that in total increases when the firm increases its output and decreases when the firm reduces its output.
Term
Marginal Cost
Definition
The additional cost of producing 1 more unit of output.
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