Ecn Chap 1-3

Front 1

the decision by an individual of what to do which necessarily involves a decision of what not to do

Back 1

individual choice

Front 2

anything that can be used to produce something else

Back 2

resources

Front 3

the quantity available isn't large enough to satisfy all productive uses

Back 3

scarce

Front 4

what you must give up in order to get something

Back 4

opportunity cost

Front 5

compare the costs with the benefits of doing something

Back 5

trade off

Front 6

decisions about whether to do a bit more a bit less of an activity

Back 6

marginal decisions

Front 7

study of decisions in which you compare the costs and benefits of doing a little bit more of an activity versus doing a little bit less

Back 7

marginal analysis

Front 8

anything that offers rewards to people who change their behavior

Back 8

incentives

Front 9

my choices affect yours and vice versa

Back 9

interaction

Front 10

they provide goods and services to others and receive goods and services in return

Back 10

trade

Front 11

people can get more of what they want through trade than they could if they tried to be self-sufficient

Back 11

gains from trade

Front 12

each person specializes in a task that he or she is good at performing

Back 12

specialization

Front 13

an economic situation in which no individual would be better off doing something different

Back 13

equilibrium

Front 14

an economy is efficient if it takes all opportunities to make some people better off without making other people worse off

Back 14

efficient

Front 15

everyone gets his or her fair share

Back 15

equity

Front 16

one persons spending is another persons income

Back 16

principle 10

Front 17

overall spending sometimes gets out of line with the economy productive capacity

Back 17

principle 11

Front 18

government policies can change spending

Back 18

principle 12

Front 19

a simplified representation of a real situation that is used to better understand real life situations

Back 19

model

Front 20

means that all other relevant factors remain unchanged

Back 20

"other things equal" assumption

Front 21

illustrates the trade offs facing an economy that produces only two goods, it shows the maximum quantity of one good that can be produced for and given production of the other good

*illustrates opportunity cost, efficiency, and economic growth*

Back 21

production possibility curve

Front 22

factors of production

Back 22

resources used to produce goods and services

1. land

2.labor

3.physical capital

4. human capital

Front 23

includes natural resources such as mineral deposits, oil, natural gas, water and actual land acreage

Back 23

land

Front 24

the mental and physical abilities of the work force

Back 24

labor

Front 25

manufactured items used to produce other goods and services

Back 25

physical capital

Front 26

the educational achievements and skills of the labor force

Back 26

human capital the technical means for producing goods and services

Front 27

explains the source of gains for trade between individuals and countries

Back 27

comparative advantage

Front 28

an ability to produce a particular god or service better than anyone else

Back 28

absolute advantage

Front 29

trade foods and services for one another

Back 29

barter

Front 30

model that represents the transactions in an economy by flows around a circle

Back 30

circular flow diagram

Front 31

is a person or a group of people that share their income

Back 31

household

Front 32

an organization that produces goods and services for sale

Back 32

firm

Front 33

where firms sell goods and services that they produce to households

Back 33

markets for goods and services

Front 34

firms buy the resources they need to produce goods and services from this

Back 34

factor markets

Front 35

is the branch of economic analysis that describes the way the economy actually works

Back 35

positive economics

Front 36

makes prescriptions about the way the economy should work

Back 36

normative economics

Front 37

a simple prediction of the future

Back 37

forecast

Front 38

2 reasons economists disagree

Back 38

1. they may disagree about which simplifications to make in a model

2. about values

Front 39

many buyers and sellers, same good or service

Back 39

competitive market

Front 40

a model of how a competitive market works

Back 40

supply and demand model

Front 41

shows how much of a good or service consumers will want to buy at different prices

Back 41

demand schedule

Front 42

the quantity that buyers are willing and able to purchase at a particular price

Back 42

quantity demanded

Front 43

the graphical representation of the demand schedule, show how much of a good or service consumers want to buy at any gin price

Back 43

demand curve

Front 44

states that all else being equal, as the price of a product increases, quantity demanded falls and vice versa

Back 44

law of demand

Front 45

a change in the quantity demanded at any given price represented by the change of the original demanded curve to a new position denoted by a new demand curve

Back 45

shift of the demand curve

Front 46

a change in the quantity demanded of a good that is the result of a change in that goods price

Back 46

movement alone the demand curve

Front 47

two goods in which a fall in the price of one of the goods makes consumers less willing to but the other good

Back 47

substitutes

Front 48

two goods in which a fall in the price of one good makes people more willing to buy the other good

Back 48

complements

Front 49

when a rise in income increases the demand for a good

Back 49

normal good

Front 50

when a rise in income decreases the demand for a good

Back 50

inferior good

Front 51

the quantity that producers are willing and able to sell at a particular price

Back 51

quantity supplied

Front 52

shows the quantity supplied at various prices, shows graphically how much of a good or service people are willing to sell at any given price

Back 52

supply curve

Front 53

a change in the quantity supplied of a good at any given price

Back 53

shift of the supply curve

Front 54

a change in the quantity supplied of a good that is the result of a change in that goods price

Back 54

movement alone the supply curve

Front 55

leftward shift

Back 55

decrease in supply

Front 56

rightward shift

Back 56

increase in supply

Front 57

a good that is used to produce another good

Back 57

input

Front 58

price at which the quantity demanded of a good equals the quantity supplied of that good

Back 58

equilibrium price

Front 59

the quantity of the good bought and sold at equilibrium price

Back 59

equilibrium quantity

Front 60

there is a ____ of a good when the quintet supplied exceeds the quantity demanded, occur when the price is above its equilibrium level

Back 60

surplus

Front 61

there is a ____ of a good when the quantity demanded exceeds the quantity supplied, over when the price is below its equilibrium level

Back 61

shortage

Front 62

factors that shift the demand curve

Back 62

1. a change in the prices of related goods or services such as substitutes or compliments

2. a change in income- when income rises the demand for a normal good increases

3. a change in tastes

4. a change in expectations

5. a change in the total number of consumers

Front 63

factors that shift the supply curve

Back 63

1. a change in the input prices

2. a change in the prices of related goods and services

3. a change in technology

4. a change in expectations

5. a change in the number of producers

Front 64

the price at which the quantity demanded equals the quantity supplied

Back 64

market clearing price