The amount of a good or service that consumers are willing and able to buy at different prices
The best alternative foregone when an economic decision is made
An inferior good is a good whose demand decreases when consumer income rises and vice versa. It has a negative YED value
The amount of a good or service that producers are willing and able to supply at different price
Two goods competing for the same resources for production
Goods that are consumed with each other. They have a negative XED value
Goods that are supplied together from the production of one product.
Taxes on spending of goods and services by consumers, collected by the supplier on behalf of the government.
The price received by a producer in excess of the price that the producer would be willing and able to offer for sale.
Where resources are allocated in such a way that neither too much nor too little is produced from society’s point of view.
Money given to firms by the government to (choose one)
- Reduce production costs
- Reduce prices
- Increasing supply
- Increase consumption,
- Increase investment and employment
- Protect domestic industries from imports
A good that offers similar benefits to the consumer as another good. It has a positive XED value
Goods that will increase in demand as income rises and vice versa. They have a YED greater than 0.
The interaction between buyers and sellers in order to exchange goods or services
The difference between what consumers are willing and able to pay and the market price.
A raw or unprocessed material that is harvested or extracted
Cross price elasticity of demand
The responsiveness of the demand of one good to a change in the price of another good
Price elasticity of demand
The responsiveness of quantity demanded to a change in price
Income Elasticity of Demand
A measure of the responsiveness of demand to a change in income.
Price elasticity of supply
The responsiveness of quantity supplied to a change in price
A luxury good is a good for which demand increases more than proportionally as income rises. They are not necessary for living, but are deemed as highly desired within a culture or society
ad valorem taxes
An indirect tax which is a percentage of the selling price
Underground (Informal) Markets
Markets where there is economic activity that is unrecorded (illegal/not taxed) by the government.
A minimum price set by the government which is above the market equilibrium price.
A maximum price set by the government which is below the market equilibrium price.
An indirect tax which is a fixed amount of tax per unit sold.
Goods or services considered to be harmful to people which are over-provided by the market and therefore over-consumed
Positive externalities of consumption
Positive effects on third parties that arise when a good or service is consumed.
Goods and services considered to be beneficial society that would be underprovided by the market and under-consumed
Positive externalities of production
Positive effects on third parties that arise when a good or service is produced..