The following is a list of key terms and brief definitions.

See if you can match the terms and

definitions before you look at the answers given at the end.
a) Elastic demand
b) Tax revenue
c) Average revenue
d) Many firms
e) Barriers to entry
f) Breakeven point earning zero
economic or normal profit
g) Choice
h) Market power
i) competition policy
j) Consumer surplus
k) Price elasticity of demand
l) Deadweight loss
m) Efficiency
n) Tax wedge
o) Total revenue
p) Exports
q) Few buyers
r) Few firms
s) Government ownership of
monopolys
t)

Unit elastic demand

u) Imports
v) Interdependence
w) Making a profit

1. Limited resources and unlimited wants

2. Whatever must be given up to obtain some new item
3. Due to scarcity, consumers/firms must decide between
competing goods/factors of production
4. A graph that shows the combinations of output the
economy can possibly produce given the available
factors of production and the available production
technology
5. Responsiveness of quantity demanded to a change in
price
6. Price times quantity
7. Percentage change in quantity demanded divided by the
percentage change in price equals 1
8. Percentage change in quantity demanded divided by the
percentage change in price < 1
9. Percentage change in quantity demanded divided by the
percentage change in price > 1
10. Goods produced domestically and sold abroad
11. Goods produced abroad and sold domestically
12. Who ultimately pays a tax, after supply and demand
adjust to the tax
13. Tax payments made by consumers and producers
14. The effect of a tax on a good or service that lowers the
price received by sellers relative to the price paid by
buyers difference between what the buyer pays and
what the seller receives.
15. The amount a seller is paid minus the costs of production
16. The amount that a buyer is willing to pay for a good,
minus the amount that the buyer actually pays for it
17. A state in which an allocation of resources maximizes
total surplus (consumer plus producer surplus)
18. The ability of some buyers or sellers to control pricesthe ability of a firm to influence market price
19. Absence of deadweight loss
20. The size of the tax times the quantity sold
21. The reduction in total surplus that results from a tax,
tariff or import quota.
22. A tax on imported goods
23. A quantity restriction placed on imported goods
24. the price of a good or service prevailing in global
markets
25. a market with many buyers and sellers trading identical
products so that each buyer and seller is a price taker
26. factors which prohibit or make it difficult for new firms
to enter an industry
27. sufficient firms so that no one firm is able to influence

x) Many buyers
y) Inelastic demand
z) Average total cost
aa) Marginal cost
bb) Marginal revenue
cc) Monopoly
dd) Oligopoly
ee) Opportunity cost
ff) Import quota
gg) Producer surplus
hh) Production possibility frontier
ii) Profit maximization
jj) Regulation of monopoly power
kk) Scarcity
ll) Social welfare
mm) Tariff
nn) Tax burden
oo) Tax incidence
pp) Uncertainty
qq) World price
rr) Competitive market

market prices
28. sufficient buyers so that no one buyer is able to influence
market prices
29. small number of firms so that each firm is able to
influence market prices
30. small number of buyers so that each buyer is able to
influence market prices
31. the change in total revenue from an additional unit sold
32. total revenue divided by the quantity sold, identical to
price
33. the minimum price that a business will accept rather than
go out of business in the long run, equal to the minimum
average total cost
34. a firm that is the sole seller of a product for which there
are no close substitutes
35. market structure where there are a few firms, each able to
influence the market, creating interdependence and
uncertainty
36. decisions of one firm will affect the outcomes of other
firms
37. firms are unsure of how competitors will respond to their
decisions
38. a firm is producing where the addition to total revenue
exactly equals the addition to total cost (MR=MC)
39. a firm is producing where total revenue is equal to or
greater than total cost (compare AR with ATC)
40. government interferes in the decision making process of
markets e.g. by setting prices
41. regulations to prohibit or minimise anti-competitive
behaviour
42. governments runs a monopoly to provide more efficient
outcome for society usually relates to natural
monopolies e.g. water, gas, electricity, public transport
43. the cost to firms of employing the next factor of
production
44. total cost divided by output

Answers
1. scarcity
2. opportunity cost
3. Choice
4. Production possibility frontier
5. Price elasticity of demand
6. Total revenue
7. Unit elastic demand
8. Inelastic demand
9. Elastic demand
10. Exports
11. Imports
12. Tax incidence
13. Tax burden
14. Tax wedge
15. Producer surplus
16. Consumer surplus
17. Social welfare
18. Market power
19. Efficiency
20. Tax revenue
21. deadweight loss
22. tariff
23. import quota
24. world price
25. competitive market
26. barriers to entry
27. many firms
28. many buyers
29. few firms
30. few buyers
31. marginal revenue
32. average revenue
33. breakeven point earning zero economic or normal profit
34. monopoly
35. oligopoly
36. interdependence
37. uncertainty
38. profit maximization
39. making a profit
40. regulation of monopoly power
41. competition policy
42. government ownership of monopolys
43. marginal cost
44. average total cost