Eco 2023

Front 1

The outputs (goods/services) that a firm can produce is/are limited by the firm's inputs (factors of production).

Back 1

Production Possibility Frontier

Front 2

Factors of production are the firm's resources: K, N, L, M

Back 2

K - Capital
N - Labor
L - Land
M - Material

Front 3

A function that shows the maximum production capacity of a firm, given the firm is using all its inputs efficiently.

Back 3

PPF

Front 4

A table that lists all of the firms possible production.

Back 4

Production schedule

Front 5

The highest cost incurred by the agent in order to engage in a certain activity.

Back 5

Opportunity Costs (OC)
- Trade Off

Front 6

The additional benefit/cost to a decision.

Back 6

Marginal analysis
- Marginal benefit = Marginal cost

Front 7

The idea that the more resources added to an activity, the smaller the payoff from the activity.

Back 7

Increasing Marginal OC
- Also known as the diminishing return

Front 8

The ability of an agent (firm, gover) to produce an output of a lower OC than its competitor.

Back 8

Comparative Advantage

Front 9

The act of buying or selling

Back 9

Trade

Front 10

The ability of an agent to simply produce more regardless of OC

Back 10

Absolute Advantage

Front 11

What are the three assumptions made when dealing with supply and demand?

Back 11

1. Products are homogeneous.
2. Free and competitive markets.
- Large number of firms
- Large number of consumers
3. No monopolies.

Front 12

Says that there is an inverse (negative) relationship between the price of a good and the quantity demanded.

Back 12

Law of Demand

Front 13

Is a table that shows all the possible combinations of price and quantity demanded for a given production.

Back 13

Demand Schedule

Front 14

Function that graphically describes the demand schedule.

Back 14

Demand Function

Front 15

*Understand This Concept*

Back 15

Demand- refers to the demand schedule.

Quantity demand- refers to combination of P and Q.

Front 16

What are the four types of goods?

Back 16

1. Normal goods
2. Inferior goods
3. Substitute goods
4. Complement goods

Front 17

A good with a positive relationship between consumer income and demand. Most goods in the market are this.

Back 17

Normal goods

Front 18

A good with a negative relationship between consumer income and demand.

Back 18

Inferior goods

Front 19

Goods that could be used to replace each other. The consumers buy one good, demand for the other good increases.

Back 19

Substitute goods

Front 20

As the demand for the good goes up, so does the demand for the complement good.

Back 20

Complement goods

Front 21

*Understand This Concept*

Back 21

The 5 common factors that shift the demand curve.

Front 22

There is a positive relationship between the price (p) and the quantity (q) supplied

Back 22

Law of supply

Front 23

A table that shows all the possible combinations of price and quantity supplied for a product.

Back 23

Supply schedule

Front 24

All possible combinations of Q and P (the supply schedule or supply function) supplied by firm.

Back 24

Supply

Front 25

The amount of a product that firms are willing to sell at a given price.

Back 25

Quantity supplied

Front 26

*Understand This Concept*

Back 26

The five common factors that shift a supply curve.

Front 27

The name of the idea that the purpose of a market is to bring buyers (demand) and sellers (supply) together.

Back 27

Market Equilibrium

- Supply = Demand -> Market equilibrium

Front 28

Consumers desire to buy more goods, at a given price, than what suppliers are willing to supply.

Back 28

Excess Demand (Shortage of Goods)

Front 29

Suppliers desire to supply more of the good, at a given price, than what consumers are willing to buy.

Back 29

Excess Supply (Surplus of Goods)

Front 30

Dollar benefit consumers derive from consuming goods/services.

Back 30

Consumer Surplus (CS)

Front 31

Dollar benefit producers (profit) derive from supplying goods/services.

Back 31

Producer supply (PS)

Front 32

Total dollar benefits derived by the entire economy from producing and supplying goods/services as economic surplus

Back 32

Economic Surplus (ES)

Front 33

Taxes are used in order to finance government. What are three types of government taxes?

Back 33

1. Federal taxes
2. State taxes
3. Country/city taxes

Front 34

Tax where dollar is taxed per unit sold/bought in the market

Back 34

Per unit tax

Front 35

Percent of price of the unit in the market.

Back 35

Ad valuem tax

Front 36

Whenever government taxes, the create DWL in competitive markets. What is DWL?

Back 36

DWL = Dead Weight Loss

Front 37

Measures who bears the burden of the tax.

Back 37

Tax incidence