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64 Cards in this Set

  • Front
  • Back
the study of how best to allocate scarce resources among competing uses
economics
the most desired goods and services that are forgone in order to obtain something else
opportunity cost
resource inputs used to produce goods and services; e.g. land labor capital and entrepreneurship
factors of production
lack of enough resources to satisfy all desired uses of those resources
scarcity
natural resources
land
number and skills of workers
labor
machinery, buildings, networks
capital
skill in creating products, services, processes
entrepreneurship
the alternative combinations of goods and services that could be produced in a given time period with all available resources and technology
production possibilities curve
the what?
expenditures on production of new plant and equipment capital in a given time period, plus changes in business inventories
investment
an increase in output (real GDP): an expansion of production possibilities
economic growth
the use of market prices and sales to signal desired outputs or resource allocations
market mechanism
the doctrine of "leave it along" of nonintervention by gov. in the market mechanism
laissez faire
an economy that uses both market and nonmarket signals to allocate goods and resources
mixed economy
an imperfection in the market mechanism that prevents optimal outcome
market failure
costs (or benefits) of a market activity borne by a third party; the difference between the social and private costs (or benefits) of a market activity
externalities
government intervention that fails to improve economic outcomes
government failure
the study of aggregate economic behavior, of the economy as a whole
macroeconomics
the study of individual behavior in the economy, of the components of the larger economy
mircoeconomics
the assumption that nothing else changes
ceteris paribus
all production entails an opportunity cost
we can produce more of output a if we produce less of output b
by multiplying the physical output of each good by its price,
we can determine the total value of each good produced
the total value of final goods and services produced within a nation's borders in a given time period
GDP
the value of output measured in current prices
nominal GDP
the inflation-adjusted value of GDP; the value of output measured in constant prices
real GDP

this is what you compare
total GDP divided by total population: average GDP
per capita GDP
an increase in output (real GDP); an expansion of production possibilities
economic growth
mix of output
household consumption
business investment
gov services
exports
consumers
durables,
nondurables - food, water, inelastic
services
expenditures on production of new plant and equipment (capital) in a given time period, plus changes in business inventories
investment
payments to individuals for which no current goods or services are exchanged; social security, welfare, unemployment benefits
income transfers
imports are greater than
exports
resource inputs used to produce goods and services, eg land labor capital entrepreneurship
factors or production
production processes that use a high ration of capital to labor inputs
capital intensive
output per unit of input, eg, output per labor hour
productivity
the knowledge and skills possessed by the workforce
human capital
a firm that produces the entire market supply of a particular good or service
monopoly
costs or benefits of a market activity borne by a third party
externalities
the way total personal income is divided up among households or income classes
personal distribution of income
a tax system in which tax rates rise as income rises
progressive tax
a tax system in which tax rates fall as incomes rise
regressive tax
any place where goods are bought and sold
market
any place where factors of production, land labor capital, entrep) are bought and sold
factor market
any place where finished goods and services products are bought and sold
product market
the direct exchange of one good for another, without the use of money
barter
the ability and willingness to sell/ produce specific quantities of a good at alternative prices in a given time period, ceteris paribus
supply
the ability and willingness to buy specific quantities of a good at alternative prices in a give time period, ceteris paribus
demand
the most desired goods or services that are forgone in order to obtain something else
opportunity cost
a table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a give time period, ceteris paribus
demand schedule
a curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period
demand curve
the quantity of a good demanded in a given time period increases as its price falls, inverse
law of demand
the assumption of nothing else changing
ceteris paribus
a change in the quantity demanded at any given price
shift in demand
changes in quantity demanded
movements along a given demand curve in response to price changes of that good
change in demand
shifts of demand curve due to changes in tastes, income, other goods, expectations
the total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands
market demand
the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period
market supply
the quantity of a good supplied in a given time period increases as its price increases
law of supply
the amount by which the quantity demanded exceeds the quantity supplied at a give price; excess demand
market shortage
the amount by which the quantity supplied exceeds the quantity demanded at a give price; excess supply
market surplus
upper limit imposed on the price of a good or service
price ceiling
CDI
ceiling, demand increases so it causes a shortage
lower limit imposed on the price of a good
price floor
supply up, causes surpluses
government intervention that fails to improve economic outcomes
gov failure
the use of market prices and sales to signal desired outputs or resource allocations
market mechanism