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Flashcards: Fundamental concepts and terms
Consumer Goods/Services
Products or services directly used by people to satisfy their wants.
Producer Goods/Services
Goods used to produce consumer goods or other producer goods.
Necessities
Products required to support human life, purchased in similar quantities despite price changes.
Luxuries
Desired products purchased after necessities are obtained if money is available.
Supply
The quantity of a product or service available to be sold.
Demand
The quantity of a commodity bought at a certain price in a given place and time.
Elastic Demand
When the quantity demanded is highly responsive to price changes.
Inelastic Demand
When the quantity demanded is relatively unresponsive to price changes.
Perfect Competition
Market structure with many vendors, none able to influence market prices.
Monopoly
A market where a single vendor supplies a unique product and blocks new vendors.
Monopsony
A market with a single buyer, who exerts control over prices and purchase quantities.
Oligopoly
A market with few suppliers, where one’s actions affect others.
Oligopsony
A market with few buyers who together influence price and quantity of goods.
Law of Diminishing Returns
Economic principle that as more of one input is added, the incremental output will eventually decrease.