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107 Cards in this Set
- Front
- Back
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What is economics all about?
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Efficient allocation of resources
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Name the four factors of production.
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Land, Labor, Capital, and Entrepeneurship
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Define Land
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all natural resources: farm land, air, ocean, timber, minerals
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Define Labor
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all human effort involved in the production process
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Define Capital
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anything man made used in extending the production process: machinary, tools, equipment
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Define Entrepreneurship
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combines land, labor, and capitial in order to produce a good or service: risk taker
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The return to land is...
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rent
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The return to labor is...
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wages
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The return to capitial is...
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interest
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The return to entrepreneurship is...
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profits
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Which circle in the circle flow of wealth or wheel of wealth represents the real sector?
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inner circle
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What does the outer circle of the circle flow of wealth or wheel of wealth represent?
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the monetary sector
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A production possibility curve(PPC)or prodution possibility fronter shoes...
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the max amount of output an economy is capable of producting, given the resources
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Name the three types of PPC.
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Linear, Convex, and Concave
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What principal does a Linear PPC show?
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the principal of constant returns
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The principal of constant returns assumes...
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the factors of production are prefectly substitutable
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A linear PPC compares guns and butter. If 10 tons of butter are lost, how many tons of guns are gained?
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10 tons
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What does an outward shift in the PPC represent?
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economic growth
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Give three reasons for an outward shift in the PPC.
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discovery of new resources, break throughs in technology, and improvement in human skills
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Define Opportunity Cost.
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The highest alternative that one has to give up in order to make a choice
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The concept of demand is..
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the willness and the ability to acquire godds and services
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A Demand Schedule show the relationship between...
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two variables, price and quanity
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A graph that shows how many units of a good the consumer is willing and able to buy at various prices at any given time period is called a....
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Demand Schedule
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What kind of relationship do price and quanity have with a typical demand schedule?
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inverse
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On a typical demand schedule when price goes up, quanity demanded goes...
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down
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What types of items generate a positively sloped demand curve?
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Items bought to show off: sports cars
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Who came up with the idea of Conspicouos Consumption or Invidious Comparison?
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ThorsFein Veblen
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The law of demand states...
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All things being equal (ceteris paribus) as the price of a commodity goes up, the quanity demanded goes down, as the price of commodity goes down, the quanity demanded does up
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List six factors that influence consumer demand also called determinants of demand.
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income, income distribution, population, changes in the composition of population, price of other goods, taste
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If there is an increase in income then the demand curve..
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moves or shifts upward and to the right
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When the whole demand curve moves or shifts upward and to the right it represents...
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an increase in demand or that at the same price the consumer buys more of the good
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When there is a decrease in supply at the same price the comsumer buys ___ of the good.
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less
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What happens to the demand curve when income goes down?
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it moves or shifts downward and to the left
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If the population increase than demand...
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increases
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What are the two types of other goods that can effect the demand of a particular good?
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complementary goods and substitute goods
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If the price of Cameras goes down, but the price of film stays the same what happens to the quanity of film demanded?
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it increases because its complementary good when down in price
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A change or shift in quanity demanded occurs...
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whenever the price of the commodity concerned changes
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When a change or shift in quanity demanded occurs does the demand curve move or shift?
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No
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What causes a change or shift in demand?
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the determinates or factors of demand
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When a change or shift in demanded occurs does the demand curve move or shift?
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yes
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The horizontal summation of individual demand curves is..
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the market demand curve
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What shows hows many units of good(x) that producers are willing and able to bring to the market at any given time?
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A supply schedule
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On a supply schedule price and quanity have a
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direct relationship
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As the quanity of supply goes up, what happens to the price?
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it goes up
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A supply curve is defined as..
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a graphical or geometeric exposition of a supply schedule
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Is a supply curve positively or negatively sloped?
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positively
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All things being equal (CeFeris paribus) as the price of a commodity goes up the quantity supplied also goes up and vise versa. This is called...
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the law of supply
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List six factors influencing (determinants of)supply.
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technology, price of resources, number of producers, price of other goods, price expectations, natural factors
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What are some examples of natural factors that influence supply?
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drought, flood, earthquake, war
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What happens to the supply curve when at the same price producers bring more of the ood to the market...
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it mover or shifts downward and to the right, this represents an increase in supply
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The horizontal summation of individual demand curves is..
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the market demand curve
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What shows hows many units of good(x) that producers are willing and able to bring to the market at any given time?
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A supply schedule
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On a supply schedule price and quanity have a
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direct relationship
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As the quanity of supply goes up, what happens to the price?
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it goes up
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A supply curve is defined as..
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a graphical or geometeric exposition of a supply schedule
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Is a supply curve positively or negatively sloped?
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positively
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All things being equal (CeFeris paribus) as the price of a commodity goes up the quantity supplied also goes up and vise versa. This is called...
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the law of supply
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List six factors influencing (determinants of)supply.
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technology, price of resources, number of producers, price of other goods, price expectations, natural factors
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What are some examples of natural factors that influence supply?
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drought, flood, earthquake, war
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What happens to the supply curve when at the same price producers bring more of the ood to the market...
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it mover or shifts downward and to the right, this represents an increase in supply
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A decrease in supply causes the whole supply curve moves or shifts upward and to the left and means at the same price...
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suppliers bring less to the market
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When the Price of Economic Resources increases, supply...
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decreases
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If the price of corn $1 and the price of soybeans is $25 which is a farmer going to great more of?
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soybeans
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As the number of producers goes down the supply goes...
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down
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If the quanity of supply changes there is moment..
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along the same curve
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The price of the commodity concerned changes whenever...
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there is a change or shift in quanity supplied
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A change or shift in supply causes the supply curve..
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to move or shift
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What is the Marshallian cross?
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Graph that shows both the supply and demand curve
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How is the market price of an item determined?
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To determine the market price of any good, we must have the intersection of the supply and demand curve.
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Who came up with the Marshallian cross?
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Alfred Marshall in 1924
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The point at which the demand and supply curve intersect is called...
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Market price or stable equilibrum point
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Another name for excess supply is...
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surplus
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Another name for excess demand is...
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shortage
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Positive economics deals with...
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what it is or cause and effect
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if price goes up quanity goes down, or if price goes up quanity goes up...these are examples of what type of economics.
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positive
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What is Normative economics?
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what ought to be, economics with personal judgement and values thrown in
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The government raises minimum wage. This is an example of a...
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price floor
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Define price floor.
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A minimum price for a good or service, usually above the equillibrum point.
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Define price ceiling.
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A maximum price for a good or service, usually below the equillibrum point.
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A price ceiling creates...
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a shortage
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If the supply curve stays the same, but there is an increase in demand the price and quanity...
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increase
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If the supply curve stays the same, but there is an decrease in demand the price and quanity...
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decrease
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If the demand curve stays the same, but there is an increase in supply what happens to price and quanity?
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price decreases and quanity increase
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If the demand curve stays the same, but there is an increase in supply what happens to price and quanity?
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price increases and quanity decrease
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Both supply and demand increase, however demand increases far greater than supply than price and quanity..
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increase
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Both supply and demand increase, however supply increases far greater than demand than price and quanity..
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decrease in price, increase in quanity
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The market value of all goods and services produced in a given country in a given time period (usually a calander year) is known as..
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the GDP
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GDP stands for..
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gross domestic product
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GDP = ____ of economic activity
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pulse
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How do you calculate per capita?
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GDP/#people
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Seven weakness encountered in GDP measurement are:
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exclude housewife/husband activities, excludes all illegal activities, excludes the sale of second hand goods, omits underground economic activities, excludes the sale of intermediate goods in order to avoid double counting, excludes leisure activities, and excludes garbage and chemicals(waste)
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An example of underground activities would be..
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babysitting, trading services
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What two methods are used to measure the GDP?
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the Expenditure approach and the Income approach
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What is the formula used in the expenditure approach?
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Y = Aggregate Consumption + Aggregate Investment + Government purchases + Net Exports
Y = C + I + C + (EX - IM) |
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What are the three parts to aggregate consumption?
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durable goods, non-durable goods, and services
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Define durable good.
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A good that lasts for more than one calander year.
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What is the difference between the fluctuation in durable and non-durable goods?
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durable goods have wide fluctuation because they are not always needed where non-durable goods have mild fluctuation
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Aggregate Investment is also called...
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Gross Private Domestic Investment
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The three subgroups of aggregate investment are..
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machinery/tools, new construction, and inventories(goods made, but not bought yet)
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Net Investment =
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Gross Investment-Depreciation
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In a positive economy....
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there is an accumulation of capital, increase in productivity, and increase in future output
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A static economy is...
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not changing
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Government purchases can also be broken down into three catagories. They are:
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spend of the federal, state, and local gov
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Give two examples of federal government purchases.
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Defense and Justice
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Net Exports =
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Exports-Imports
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Nominal GDP also known as the current or unadjusted GDP is..
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measured in todays dollars
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The real or adjusted GDP is...
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the GDP with inflation taken out
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