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33 Cards in this Set
- Front
- Back
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scarcity |
resources are limited |
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wants |
are unlimited |
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centrally planned economy |
government decides are resources are allocated |
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market economy |
households and firms decide how resources are allocated |
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mixed economy |
economic decisions from which interaction of buyers and sellers, government still plays big role |
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productive efficiency |
g & s produced using least amount of resources or less costs |
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allocative efficiency |
everygood or service is produced up to the point where the last unit provides amarginal benefit to consumers equal to the marginal cost of producing it |
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dynamic efficiency |
new technology and innovation adapted over time |
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'scientific method' |
devise theories gather data test theories against data |
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positive analysis |
'what is' value free statements can be tested |
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normative analysis |
'what ought to be' value judgements cannot be tested |
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opportunity cost |
alternative option next best alturnative |
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production possibility frontiers PPF |
curve that shows maximum output levels of 2 goods |
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ppf shift inwards |
loss of resources ; war ; famine ; land degradation ; climate deterioration |
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ppf shift outwards |
gain in resources/ technology ; better education ; IT equipment ; skilled migration ; better health |
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quantity demand |
amount of g&s buyers are willing to buy at a given price |
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law of demand |
statesthat, other things being equal, the quantity demanded of a good falls when theprice of the good rises |
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price rise |
quantity demand decrease, negative relationship |
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price decrease |
quantity demand increase, inverse realtionship |
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ceteris paribus |
as other things being equal, assumed to be constant |
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quantity demand |
px py (other goods) income tastes and preferences population and size demographics future expected prices |
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quantity demand increase |
shift to right |
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quantity demand decrease |
shift to left |
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law of demand |
substitution effect income effect |
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substitution effect |
The change in the quantity demanded of agood results from a change in price, making the good more or lessexpensive relative to other goods that are substitutes negative relationship between price and qd |
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income effect |
change in quantity demanded of good that results from change in good's price on consumer purchasing power positive or negative |
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quantity supplied |
amount of g&s are willing and able to sell |
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law of supply |
states ceteris paribus, the quantity supplied of g&s rises when price of g&s rises |
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quanity supply qs |
px price of inputs (shift along curve) technology (shift L & R) climate and disasters size of industy substitutes in products |
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increase in supply |
shift right |
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decrease in supply |
shift left |
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market equilibrium |
situation in which quantity demand = quantity suppiled |
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competitive market equalibrium |
ME which many buyers and many sellers |
