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30 Cards in this Set
- Front
- Back
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Scarcity |
Fundamental economic problem; unlimited human wants with limited resources |
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Utility |
The total satisfaction received from consuming a good or service |
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Marginal Analysis |
An examination of the additional benefits of an activity compared to the additional costs of that activity |
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Marginal Benefits |
The additional satisfaction or utility that a person receives from consuming an additional unit of a good or service |
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Marginal Cost |
The change in the total cost that arises when the quantity produced is incremented by one unit; the cost of producing one more unit of a good |
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Tradeoffs |
A sacrifice that must be made to obtain a certain product, service, or experience |
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Microeconomics |
The study of individuals, households, and firms' behavior in decision making and allocation of resources |
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Macroeconomics |
The study of the economy as a whole with a focus on aggregate changes in the economy such as unemployment, growth rate, gross domestic product, and inflation |
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Production Possibilities Curve |
Production Possibilities Frontier; A curve depicting all maximum output possibilities for two or more goods given a set of inputs |
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Opportunity Cost |
The value of the next-highest-valued alternative use of that resource |
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Ceteris Paribus |
Latin phrase meaning: 'all other things remaining equal; Similar in concept to Ockham's razor |
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Absolute advantage |
The ability of a party (individual, firm, country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources |
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Comparative advantage |
Theory stating that if countries specialize in producing goods where they have a lower opportunity cost, then there will be an increase in economic welfare |
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Specialization |
A method of production where a business or area focuses on the production of a limited scope of products or services in order to gain greater degrees of productive efficiency within the entire system of businesses or areas |
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Division of Labor |
"Divide and conquer"; Assignment of different parts of a manufacturing process or task to different people in order to improve efficiency |
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Productivity |
A measure of output per unit of input |
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Market System |
Economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses; Very little central planning |
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Supply |
Fundamental economic concept; Describes the total amount of a specific good or service that is available to consumers |
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Demand |
Fundamental economic principle; Complement of Supply; Describes a consumer's desire and willingness to pay a price for a specific good or service |
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Appreciation |
Increase of the value of an asset over time; Classic/Collector cars, vintage items |
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Depreciation |
The gradual decrease in the economic value of the capital stock of a firm, nation, or other entity, either through physical depreciation, obsolescence or changes in the demand for the services of the capital in question |
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Quantity Supplied |
Term used to describe the amount of goods or services that are supplied at a given market price |
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Quantity Demanded |
Quantity of a commodity that people are willing to buy at a particular price at a particular point of time |
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Determinants of Demand |
Anything that causes a shift in the Demand curve; Tastes, number of buyers, Income, Prices of related goods, substitutes, complements, unrelated goods, consumer expectations |
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Determinants of Supply |
Anything that causes a shift in the Supply curve; Resource prices, technology, taxes and subsidies, prices of other goods, producer expectations, number of sellers
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Equilibrium Price |
Market price where the quantity of goods demanded is equal to the quantity of goods supplied |
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Surplus |
The amount of an asset or resource that exceeds the portion that is utilized |
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Shortage |
Excess Demand; When the Demand for a product or service exceeds its supply in a market; Opposite of Surplus |
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Black Market |
Economic activity that takes place outside of government-sanctioned channels |
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Price Floor |
A situation in which the price charged is more than or less than the equilibrium price determined by market forces of supply and demand |
