Econ

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product possibility frontier (production)

Back 1

a graph that shows all the combinations of goods and services that can be produced if all of society's resources are used efficiently

Front 2

comparative advantage (production)

Back 2

a producer has a comparative advantage over another in the production of a good or service if he can produce that product at a lower opportunity cost

Front 3

returns to scale (production)

Back 3

3 different kinds: increasing, decreasing, and constant (constant is good)

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cost curves (production)

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long run, long run average, marginal, short run, short run average, total variable

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substitues (types of goods)

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goods that can serve as replacements for one another; when the price of one increases, demand for the other increases

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complements (types of goods)

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goods that go together; a decrease in the price of one results in an increase in demand for the other and vice versa

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inferior (types of goods)

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goods for which demand tends to fall when income rises

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income effect (types of goods)

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the greater your income, the more you want

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substitution effect (types of goods)

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the price of substitute increases, the demand for the other increases

Front 10

elasticity (types of goods)

Back 10

a general concept used to quantify the response in one variable when another variable changes

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opportunity cost (decisions)

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the best alternative that we give up when we make a choice or a decision

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scarcity (decisions)

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limited

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utility maximizing (decisions)

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maximizing utility (measure of satisfaction of the entire population)

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profit maximizing (decisions)

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getting the most profit out of your revenue

Front 15

economic vs accounting profits (decisions)

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economic profits: (accounting profits - opportunity cost)

accounting profits: (revenue - costs)

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perfect competition (market forms)

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many firms, identical products, no barriers to entry/exit

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monopolistic competition (market forms)

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large number of firms, no barriers, but different products

Front 18

oligopoly (market forms)

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few dominant firms, products may be homogenous or differentiated

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monopoly (market forms)

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one firm, no substitutes, high barriers

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supply (markets)

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amount of products

Front 21

demand (markets)

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how much people want the product

Front 22

equilibrium (markets)

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where supply and demand meet

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consumer surplus (markets)

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the difference between the maximum amount a person is willing to pay for a good and its current market price

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producer surplus (markets)

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the difference between the current market price and the full cost of production for the firm

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dead weight loss (markets)

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the total loss of producer and consumer surplus from underproduction or overproduction

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externalities (market failures)

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a cost of benefit imposed or bestowed on an individual or a group that is outside, or external to, the transaction

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public goods (market failures)

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goods and services that bestow collective benefits on members of a society. generally no one can be excluded from enjoying their benefits

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monetary policy (government)

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the tools used by the Federal Reserve to control the quantity of money, which in turn affects interest rates

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role of the fed (government)

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they do stuff

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money supply (government)

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how much money is allowed in the market

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fiscal policy (government)

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government polices concerning taxing and spending

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tax incidence (government)

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the ultimate distribution of tax burden

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price floors (government)

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how low the price can be set

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price ceilings (government)

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how high the price can be set

Front 35

aggregate supply (macroeconomics)

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total supply of all goods and services in an economy

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aggregate demand (macroeconomics)

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the total demand for goods and services in an economy

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circular flow (macroeconomics)

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a diagram showing the income received and the payments made by each sector of the economy

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GDP (macroeconomics)

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gross domestic product. the total value of all newly produced capital goods produced in a given period

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inflation (macroeconomics)

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an increase in the overall price level