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65 Cards in this Set

  • Front
  • Back
Economics
Study of choice under conditions of scarcity
Scarcity
the conditions under which the amount of something available is insufficient to satisfy the desire for it
what are the biggest elements of scarcity?
time and spending power
Labor
time human beings spend producing goods and services
Capital
Something long-lasting used to make other things of value
Psysical capital
machinery and equipment and buildings etc
Human capital
skills and knowledge possessed by workers
Capital stock
total amount of capital at a nation's disposal at any point in time
Land/Natural resources
pre-existing "gifts of nature"
Entrepeneurship
an individual's ability to combine the other resources into a productive enterprise
Innovater
comes up with the original idea for a business
Risk taker
provides funds for a business
allocation
choosing which desire will be fulfilled
Input
anything used to produce a good or a service
Mircoeconomics
concerned with the beheivor of individual actors on the economic stage
Macroecomics
Looks at the overall view of the economy
Positive economics
simply tells how the economy works
Normative economics
provides a judgement as to how the economy works
Model
abstract representation of reality
simplyfying assumption
way of making a model simplier without changing its conclusion
Critical assumption
affects the conclusion of a model
Oppertunity cost
what we give up of the next best option to make a choice
Explicit cost
monetary costs
Implicit costs
costs that don't involve money such as time
productive inefficiency
when a firm could produce more of a good without pulling resources from another
Specialization
each person/firm concentrates on a limited number of productive activities
Exchange
trading with others to obtain what we desire
Market
a collection of buyers and seller who have the potential to trade with one another
economic system
allocates resources and creates a mode of ownership
aggregation
combining a group of distinct things into a single whole
Imperfectly competitive markets
individual buyers or sellers can influence the price of the product
Perfectly competitive market
each buyer and seller takes the market price as a given
Quantity Demanded
specific amound of a good that all buyers in the market would choose to buy over some time period given: price, and all other constraints
Law of demand
when price rises and everything else remains the same, quantity demanded must fall
productive inefficiency
when a firm could produce more of a good without pulling resources from another
Specialization
each person/firm concentrates on a limited number of productive activities
Exchange
trading with others to obtain what we desire
Market
a collection of buyers and seller who have the potential to trade with one another
economic system
allocates resources and creates a mode of ownership
aggregation
combining a group of distinct things into a single whole
Imperfectly competitive markets
individual buyers or sellers can influence the price of the product
Perfectly competitive market
each buyer and seller takes the market price as a given
Quantity Demanded
specific amound of a good that all buyers in the market would choose to buy over some time period given: price, and all other constraints
Law of demand
when price rises and everything else remains the same, quantity demanded must fall
wealth
total value of everything you own minus everything you owe
substitute
good that can be used in place of another good
supply
specific amound of a good that a supplier would choose to see over a period of time given price and other constraints
law of supply
when the price of a good rises and everything else remains the same, the quantity supplied will also rise
alternate good
another good a firm could produce
short run elasticity
elasticity measured shortly after a price change
long run elasticity
elasticity measured a year or more after a price change
Income elasticity of demand
the percentage change in quantity demanded caused by a 1% change in income
Economic necessity
a good with an income elasticity of demand between 0 and 1
Economic necessity
a good with an income elasticity of demand greater than 1
Cross price elasticity of demand
the percentage change in the quantity demanded of one good caused by a 1% change in the price of another good
Price elasticity of supply
the percentage change in quantity of a good caused by a one percent change in price
Excise tax
tax on a particular good or service
Incidence
division of a tax payment between buyers and sellers
Tax shifting
when a tax imposed on one side of the market ends up being paid by the other side
Budget constraint
identifies which combinations of goods and services the consumer can afford with a limited budget
Relative price
the price of one good compared to another good
Utility
quantitative measure of pleasure of satisfaction obtained from consuming a good
Marginal utility
change in utility that an individual enjoys from increasing consumption
indifference curve
represents all combinations of 2 goods that make the consumer equally well off
marginal rate of substitution
amount of a good that a consumer would give up for a different good