ECON Chapter 3 Notes.txt

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cxeckma
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173554
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ECON Chapter 3 Notes.txt
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2012-09-26 11:06:04
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ECON Chapter
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ISU ECON 1100 Chapter 3
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  1. Define Factor Market
    Any place where factors of production are bought and sold
  2. Define Product Market
    Any place where finished goods and services are bought and sold.
  3. Business firms participate in markets by supplying goods and ____to product markets and ____ in factor markets.
    • Services
    • Purchasing factors of production
  4. What is barter?
    The direct exchange of one good for another without the use of money
  5. Define supply.
    The ability and willingness to sell specific quantities of a good at alternative prices in a given time period, ceteris paribus.
  6. What is demand?
    The ability and willingness to buy specific quantities of a good at alternative prices in a given time period.
  7. What is opportunity cost?
    The most desired goods or services that are forgone in order to obtain something else.
  8. Define Demand schedule
    A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period.
  9. What is a demand curve?
    A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period.
  10. What is the law of demand?
    The quantity of a good demanded in a given time period increases as its price falls.
  11. Define ceteris paribus
    The assumption of nothing else changing
  12. What is a shift in demand?
    A change in the quantity demanded at any given price.
  13. What does market demand result in?
    Market demand is determined by the number of potential buyers and their respective tastes, income, other goods, and expectations.
  14. What is market demand?
    The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period. The sum of individual demands.
  15. What is market supply?
    The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period.
  16. What is the law of supply?
    The quantity of a good supplied in a given time period increases as its price increases.
  17. Define equilibrium price.
    The price at which the quantity of a good demanded in a given time period equals the quantity supplied.
  18. Market shortage is what?
    The amount by which the quantity demanded exceeds the quantity supplied at a given price: excess demand.
  19. Define Market surplus.
    The amount by which the quantity supplied exceeds the quantity demanded at a given price: excess supply.
  20. What is the price ceiling?
    Upper limits imposed on the price of a good or service.
  21. What is price floor?
    Lower limit imposed on the price of a good.
  22. Laissez faire is defined as?
    The doctrine of ´┐Żleave it alone´┐Ż of nonintervention by government in the market mechanism.
  23. Define Market Mechanism
    The use of market prices and sales to signal desired outputs.

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