Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/74

Click to flip

74 Cards in this Set

  • Front
  • Back
The summation of a person's assets:
Wealth
The study of how a society uses its scarce resources to supply the insatiable wants and needs of the society both now and in the future:
Economics
Any tangible item that meets the criteria of a want or need:
Good
Scarcity leads to ____.
costs
The items that go into producing the items that we want:
Resources (i.e. factors of production)
Any intangible but useful activity which meets the criteria of a want or need:
Service
What are scarce goods known as?
Economic goods
When the individual is making a decision:
Private choice
That which can be measured:
Positive analysis (GOOD)
The next best alternative foregone when making any decision:
Opportunity cost

=explicit costs + implicit costs
The coming together of buyers and sellers whose joint decisions determine the price:
Market
What are known as economic goods?
Scarce goods
The amount that will be purchased at a particular/specific price:
Quantity demanded
A good such that when incomes rise, demand for the good falls:
Inferior good
What are the 3 ways a society can make itself better off?
1) saving
2) specialization of labor
3) trade
When quantity demanded equals quantity supplied and there are no unintended shortages or surpluses:
Equilibrium
Cannot be measured; an opinion:
Normative analysis (BAD)
When the government is making a decision:
Public choice
States that as prices rise, quantity demanded falls, and as prices fall, quantity demanded rises:
Law of Demand
Goods you buy together:
Complements (ex: peanut butter/jelly)
A legal maximum which can be charged for a good or service:
Price ceiling
When quantity demanded is greater than quantity supplied at a specific price:
Shortage
What 5 things might change demand?
Changes in:
1) tastes and preferences
2) expectations
3) laws
4) prices of other goods
5) income
A good such that when incomes rise, demand for that good will also rise:
Normal good
The amount of a good or service that will be purchased at any given price:
Demand
A measure of consumer responsiveness:
Elasticity
All non-pecuniary costs (all costs not have to do w/$$):
Implicit costs
What is the ONLY thing that will change quantity demanded?
A change in price
When quantity supplied is greater than quantity demanded at a particular price:
Surplus
What age group is relatively responsive to a change in price?
Senior citizens
A similar good that you would buy instead of another good:
Substitute (ex: buying Panasonic instead of Sony)
States that as price rises, quantity supplied rises:
Law of Supply
The amount that people were willing to pay for a good or service, but did not have to:
Consumer surplus
List 2 facts about an effective price ceiling.
An effective price ceiling will always:

1) Lie below equilibrium
2) Cause a shortage
Accounting costs:
Explicit costs
What age group is relatively unresponsive to a change in price?
Middle age
Economic profit:
Producer's surplus
A legal minimum which can be charged for a good or service:
Price floor
If the price of one complement goes up, what will happen to the other complement?
Demand for the other will fall.
What is the price elasticity of demand equal to?
= (% change in quantity demanded)/(% change in price)

= Q2-Q1/Q1
What type of laws ALWAYS HURT the community?
Anti-price governing laws
If the price of one substitute goes up, what will happen to the other substitute?
Demand for the other substitute will also rise.
If a good is a necessity, demand for the good is:
Inelastic
If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is:
An inferior good
The ability to produce a good at a lower opportunity cost than another producer:
Comparative advantage
A flatter demand curve is more likely to be:
Price elastic
For ____ goods, income elasticity is positive.
Normal goods
If price elasticity of demand is less than 1, demand is ____.
Inelastic
If price elasticity of demand is equal to 1, demand is ____.
Unitary (has unit elasticity)
If an increase in the price of blue jeans leads to an increase in the demand for tennis shoes, then blue jeans and tennis shoes are:
Substitutes
If price elasticity of demand is greater than 1, demand is ____.
Elastic
The flatter the demand curve, the more ____.
Elastic
A measure of how much the quantity demanded of a good responds to a change in consumers’ income:
Income elasticity of demand
For ____ goods, income elasticity is negative.
Inferior goods
The steeper the demand curve, the more ____.
Inelastic
A measure of how much the quantity demanded of a good responds to a change in the price of that good:
Price elasticity of demand
The price elasticity of demand is positive for ____.
Substitutes
A measure of the relative happiness or gratification gained by consuming different bundles of goods and services:
Utility
A good characterized by a positive income elasticity:
Normal good
The ____ the demand curve, the more elastic.
Flatter
The price elasticity of demand is negative for ____.
Complements
An effective price floor always creates...
A surplus
Why do senior citizens receive discounts?
They have different time costs
The measure of responsiveness of an economic agent to a change in variable:
Elasticity
You work an Income Elasticity of Demand problem and you answer is (-1.39). Therefore you know that the product is:
Elastic and inferior
The law of demand states that price and quantity demanded are:
Inversely related
An effective price floor always lies:
Above the equilibrium
You work a Cross-Price Elasticity of Demand problem and your answer is (-0.57). Therefore you know that the product is:
Inelastic and a complement
Rent controls are also known as:
Price ceilings
An effective price ceiling always lies...
Below the equilibrium
In a competitive market for DVD players, an increase in income will cause:
DVD players = normal good

An increase in price
An effective price celing always creates...
A shortage
In a competitive marks for chips, a decrease in the price of Lays Potato Chips will cause what w/ Golden Flake Potato Chips?
Lays Chips/Golden Flake Chips = substitutes

A decrease in price
In a competitive market for tennis rackets, a fall in the price of tennis balls will cause:
Tennis racket/tennis balls = complements

An increase in price
An increase in demand
An increase in qty. supplied