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31 Cards in this Set

  • Front
  • Back
Microeconomics
The study of a single factor of an economy- such as individuals, households, businesses, and industries- rather than an economy as a whole
Macroeconomics
the study of an entire economy of one of its principal sectors
Four factors of production
Natural resources
Human resources
capital resources
entrepreneurship
Enterpreneurs
someone who undertakes and develops a new business enterprise of develops a new product, risking failure
Scarcity
The fundamental condition of economics that results from the combination of limited resources and unlimited wants
Invisible hand
The exact phrase is used just three times in Smith's writings, but has come to capture his important claim that individuals' efforts to maximize their own gains in a free market benefits society
Competition
in business, a state of rivalry among sellers of the same or similar products
Specialization
the focus of a worker on only one of a few aspects of production in order to improve efficiency
Demand
the amount of a good or service that consumers are willing and able to buy at various prices during a given period
Supply
the amount of a good or service that producers ate willing to sell at various possible prices during a given period
Demand curve
a graphic representation of a demand schedule, showing the relationship between the price of an item and the quantity demanded during a given period, with all other things being equal
Demand schedule
a table that shows the level of demand for a particular item at various prices
supply curve
a graphic representation of a supply schedule, showing the relationship between the price of an item and the quantity supplied during a given time period, with all other things being equal
supply schedule
a table that lists each quantity of a product that producers are willing to supply at various prices
Elastic demand
the situation that exists when quantity demanded changes greatly in response to a change in price
Inelastic demand
the situation that exists when quantity demanded changes only slightly or not all all in response to a change in price
Inelastic supply
the situation that exists when quantity supplied changes only slightly or not all all in response to a change in price
Elastic demand
the situation that exists when quantity supplied changes greatly in response to a change in price
Income effect
the effect that a change in an item's price has a consumers' ability to purchase goods
Surplus
a situation in which the quantity supplied of an item at a given price exceeds the quantity demanded
Shortage
a situation in which the quantity demanded of a good or resource exceeds the quantity supplied
Price floor
a government regulation that sets a minimum price for a particular good
Price ceiling
a government regulation that sets a maximum price for a particular good
Different economic systems
Traditional
Command
Market
T: based on a society's values- its customs and traditions
C: relies on government officials to answer the 3 basic econ questions
M: individuals answer the 3 basic econ questions
Adam smith and his economic philosphies
Self-interest benefits all of society by helping the economy grow
Law of Demand
the principle that, all other factors being equal, consumers will purchase (demand) more of a good lower prices and less of a good at higher prices
Income effect
the effect that a change in an item's price has on consumers' ability to purchase goods
Affirmative action
a program, supported by law, requiring U.S. employers, labor unions, and other institutions to eliminate discrimination against women and minorities by increasing hiring
COLA
is the cost of maintaining a certain standard of living
GDP
is the market value of all officially recognized final goods and services produced within a country in a given period of time
Business cycle and its phases
are fluctuations, or changes, in a market system's economic activity
Phases:
Expansion, or Recovery
Peak
Contraction, or recession
Trough