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Who identified the principle of diminishing marginal utility?
The principle was identified by economists including William Stanley Jevons and others in the Marginalist revolution.
What does the principle of diminishing marginal utility state?
People receive less additional satisfaction from each extra unit of a good or service consumed over a period of time.
What are the three functions of prices?
Transmit information, provide incentives, redistribute income.
What is the economic definition of demand?
The quantity of a good or service that consumers are willing and able to purchase at various prices, other things held constant.
State the law of demand.
Other things being held constant, the lower the price of a good or service, the greater the quantity demanded; the higher the price, the lower the quantity dema
What four conditions may change the demand for a product?
Changes in income, prices of related goods, tastes and preferences, and expectations about the future.
State the law of supply.
Other things held constant the higher the price buyers are willing to pay the greater the quantity a firm will produce; the lower the price, the smaller the q s
Which way does a supply curve slope and why?
It slopes upward because higher prices incentivize producers to supply more of the product.
What three factors could lead to a change in supply?
Changes in technology, changes in production costs, changes in prices of related goods.
At what point do supply and demand intersect?
At the market equilibrium point, where quantity demanded equals quantity supplied.
What occurs when the price of a product is higher than the equilibrium price?
A surplus occurs—quantity supplied exceeds quantity demanded.
What is the simplest solution to a surplus?
Allow the market to work by lowering the price until equilibrium is restored.
What condition causes a shortage, and what are its possible solutions?
A shortage occurs when the price is held below equilibrium. Solutions include increasing supply, decreasing demand, or allowing prices to rise.
How can a Christian show Christ to others during a surplus or shortage?
By demonstrating patience, fairness, and compassion, helping others in need, and encouraging ethical behavior in market dealings.
What is supply?
The amount of goods and services business firms are willing and able to provide at different prices.
What does a supply schedule show?
A table listing various quantities produced at various prices.
