CSET Social Science Subtest 3: Economics Graded A+
- Microeconomics
- The study of the economic behavior and decision-making processes of small entities such as
individuals, families, and businesses.
- Demand
- The willingness and ability of consumers to purchase products.
- Law of Demand
- States that as the price of a product increases, the quantity demanded decreases.
- Real Income
- Income that has been adjusted for inflation.
- Real Income Effect
, - An economic principle stating that individuals cannot continue to purchase the same quantity of a
product if its price increases while their income remains unchanged.
- Substitution Effect
- An effect where a rise in price causes consumers (whose income has remained constant) to buy more
of a lower-priced alternative and less of the higher-priced item.
Diminishing Marginal Utility ✔️Decreasing satisfaction or usefulness as additional units of a product are
acquired.
Price Elasticity of Demand ✔️Measure of how much consumers respond to a price change.
Elastic ✔️Demand that is very sensitive to a change in price
Inelastic ✔️Describes demand that is not very sensitive to a change in price.
Law of Supply ✔️As price increases, quantity supplied increases
, Factors of Supply ✔️1. Price of Inputs
2. Number of Firms
3. Taxes
4. Technology
Equalibrium price ✔️The point where the quantity of demand and the quantity of supplied meet.
Shortage ✔️Situation where quantity supplied is less than quantity demanded at a given price, causing
the price to rise.
Surplus ✔️A situation in which quantity supplied is greater than quantity demanded, cause the price to
drop.
Price Ceiling ✔️A legal maximum on the price at which a good can be sold. Often leading to shortages.
- Microeconomics
- The study of the economic behavior and decision-making processes of small entities such as
individuals, families, and businesses.
- Demand
- The willingness and ability of consumers to purchase products.
- Law of Demand
- States that as the price of a product increases, the quantity demanded decreases.
- Real Income
- Income that has been adjusted for inflation.
- Real Income Effect
, - An economic principle stating that individuals cannot continue to purchase the same quantity of a
product if its price increases while their income remains unchanged.
- Substitution Effect
- An effect where a rise in price causes consumers (whose income has remained constant) to buy more
of a lower-priced alternative and less of the higher-priced item.
Diminishing Marginal Utility ✔️Decreasing satisfaction or usefulness as additional units of a product are
acquired.
Price Elasticity of Demand ✔️Measure of how much consumers respond to a price change.
Elastic ✔️Demand that is very sensitive to a change in price
Inelastic ✔️Describes demand that is not very sensitive to a change in price.
Law of Supply ✔️As price increases, quantity supplied increases
, Factors of Supply ✔️1. Price of Inputs
2. Number of Firms
3. Taxes
4. Technology
Equalibrium price ✔️The point where the quantity of demand and the quantity of supplied meet.
Shortage ✔️Situation where quantity supplied is less than quantity demanded at a given price, causing
the price to rise.
Surplus ✔️A situation in which quantity supplied is greater than quantity demanded, cause the price to
drop.
Price Ceiling ✔️A legal maximum on the price at which a good can be sold. Often leading to shortages.
