Economics Unit 2 Vocabulary

What is the term for the willingness and ability of consumers to purchase a good or service at a given price?

• Supply

• Demand

• Elasticity

• Subsidy

What effect occurs when consumers replace a more expensive item with a less expensive alternative?

• Income Effect

• Substitution Effect

• Price Effect

• Demand Effect

What is the term for the graphical representation of the total quantity of a good that all producers in a market are willing to sell at various prices?

• Demand Curve

• Market Supply Curve

• Equilibrium Curve

• Production Possibility Curve

What is a government payment that supports a business or market, often to keep prices low or maintain the supply of a good?

• Tax

• Subsidy

• Tariff

• Quota

Which law states that, all else being equal, an increase in price results in an increase in quantity supplied?

• Law of Demand

• Law of Supply

• Law of Marginal Utility

• Law of Diminishing Returns

Which branch of economics studies the behavior of individuals and firms in making decisions regarding the allocation of resources?

• Macroeconomics

• Microeconomics

• Econometrics

• Behavioral Economics

What is the term for the situation where the quantity demanded exceeds the quantity supplied at a given price?

• Surplus

• Shortage

• Equilibrium

• Excess

What is the term for the amount of money required to purchase a good or service?

• Cost

• Price

• Value

• Expense

What is the term for a factor that motivates individuals to perform an action?

• Demand

• Incentive

• Elasticity

• Subsidy

What is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service?

• Total Utility

• Marginal Utility

• Average Utility

• Incremental Utility