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