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| Factors of production (a.k.a. inputs) |
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| People have more or less unlimites wants, but the resources that are available are limites |
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| All natural or non-human resources: air, mineral deposites, oil, etc. |
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| Physical and mental capabilities to work |
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| A manufactured good that is used to produce something else; a produced means of further production: i.e. machines, buildings, office furniture, lumber (not timber) |
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| A person who makes the decisions |
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Definition
| The relationship between the price of an item and the amount of it that people will buy |
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Definition
| The quantity demanded of an item varies inversely with its price, other things equal |
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| Why Is The Demand Curve Downward Sloping? |
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Definition
1. When the price of something goes down, people can afford to buy more of it (ability to buy)
2. When price falls, people may buy more because it is a bargain relative to what else they could buy (willingness to buy) |
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Definition
| Two or more goods which are interchangable (ex. butter and margarine) |
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| Teo or more goods which are used together (ex: peanut butter and jelly) |
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| What people think MIGHT happen in the future can influence how they buy TODAY |
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Definition
Everything else:
a. age e. religion
b. gender f. education
c. race g. occupation
d. taste h. fashion/ trends
etc. |
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| Change in Quantity Demanded |
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Definition
| Movement along a demand curve, which occurs because price has changed |
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Definition
| The whole curve is shifted because something else (income, price of substitutes, price of compliments, expectations, non-monetary factors) changes |
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Definition
| The relationship between the price of an item and the amount of it that producers/sellers are willing to sell |
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| Retaining the Market Mechanism |
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Definition
| Price Ceilings: a legal maximum that is set below the equalibrium |
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Definition
| A measure of responsiveness |
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Definition
The percentage change in quantity (demanded or supplied) resulting from a one percent change in price
E= percentage change in quantity/ percentage change in price |
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Definition
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Definition
| E is greater than one (Change in quantity> change in price) |
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Definition
E=1
Change in quantity= Change in price |
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Definition
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Definition
E=0
E= % change in quantity/ % change in price |
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| Determinants of Elasticity (4) |
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Definition
1.Substitutes
2. Inexpresiveness
3. Time
4. Luxury vs. Necessity Good |
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Definition
| When the average curve is rising, the marginal curve is above it |
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Definition
| When the average curve is falling, the marginal curve is below it |
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Definition
When the average curve is NEITHER rising nor falling (at a maximum or minimum) marginal equals average
Ex: baseball, basketball averages |
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Definition
| When the total curve is increading at an increasing rate, the marginal curve is rising |
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Definition
| When the total curve is increasing at a decreasing rate, the marginal curve is falling |
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Definition
| When the total curve is falling, the marginal curve is negative |
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Term
| The 3 Advantages of Being a Bigger Company |
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Definition
1. Greater specialization of resources
2. More efficient utilization of equipment
3. Reduced unit cost of inputs (volume discount idea) |
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