Allocation of Resources

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Complementary Goods
Purchased to support another product
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Contraction in demand
movement along the demand curve to the left (higher price and lower quantity demanded)
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Contraction in supply
movement along the supply curve to the right (lower price and lower quantity supplied)
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Demand
A want backed up by the ability to pay for a product
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Diminishing marginal utility
Consumption of addional units of a product provide less utility (satisfaction) each time
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Effective demand
The financial ability to purchase a product
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Elasticity
the responsivness of quantity supplied or demanded in relation to changes in price/income/other products
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Equilibrium
The point where the supply and demand curves intersect
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Excess demand
Quantity demanded is greater than the quantity supplied at a given price
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Excess supply
quantity supplied is greater than the quantity demanded at a given price
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Extension in demand
a movement along the demand curve to the right (lower price and higher quantity demanded)
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Extension in supply
a movement along the supply curve to the right (higher price and higher quantity supplied)
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External Costs
Costs of production that have to be paid by someone other than the firm/individual
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Externall benefits
benefits of production to population not associated with the firm
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Individual demand
the amount a single person would be willing to buy at a range of prices
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Inferiour goods
Goods that consumers demand less of as incomes increase due to them being able to buy higher quality alternatives
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Marginal Utility
The additional satisfaction gained from the consumption of an extra unit of a product
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Market demand
The total demand for a product
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Price elastic demand
and percentage change in price results greater percentage in quantity demanded
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Price inelastic demand
a percentage change in price results in smaller percentage cahnge in quantity demanded
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Price elastic supply
A percentage change in price results in a greater percentage in quantity supplied
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Price inelastic supply
a percentage change in price results in smaller percentage change in quantity supplied
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Private Costs
The costs that the company/individual has to pay for production
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Social costs
Private costs + external costs
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Social benefits
Private benefits + external benefits
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Substitute goods
Alternative for a product
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Supply
The number of goods/services firms are able/willling to produce at a range of prices
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Unitary Elasticity
Percentage change in price results equal percentage change in quantity demanded or supplied
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Other cards in this set

Card 2

Front

Contraction in demand

Back

movement along the demand curve to the left (higher price and lower quantity demanded)

Card 3

Front

Contraction in supply

Back

Preview of the front of card 3

Card 4

Front

Demand

Back

Preview of the front of card 4

Card 5

Front

Diminishing marginal utility

Back

Preview of the front of card 5
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