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30 Cards in this Set
- Front
- Back
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Efficiency
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The property of a resource allocation of maximizing the total surplus received by all members of a society
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Equity
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The fairness of the distribution of wellbeing among the members of society
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consumer surplus
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buyers willingness to pay for a good minus the amount they actually pay for it
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producer surplus
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the amount sellers receive for their goods minus their costs of production
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welfare economics
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the study of how the allocation of resources affects economics well-being
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willingness to pay
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the maximum amount that a buyer will pay for a good
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cost
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the value of everything a seller must give up to porduce a good
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normal good
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a good in which other things equal an increase in income leads to an increase in demand
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inferior good
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a good in which other things equal an increase in income leads to a decrease in demand
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substitutes
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two goods for which an increase in the price of one leads to an increase in the demand for the other
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complements
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two goods for which an increase in the price of one leads to the decrease in the demand for the other
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equilibrium quantity
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the quantity supplied and the quantity demanded at the equilibrium price
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equilibrium price
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the price that balances quantity supplied and quantity demanded
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supply curve
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a graph of the relationship between the price of a good and the quantity supplied
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law of supply
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other things equal the quantity supplied of a good rises when thte price of a good rises
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quantity supplied
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the amount of a good that sellers are willing and able to sell
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positive statement
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an assertion about how the world is
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normative statement
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an assertion about how the world ought to be
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microeconomics
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study of decision making by the households and firms and their interaction in the marketplace
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macroeconomics
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study of the forces and trends that affect the economy as a whole
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imports
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goods produced abroad and sold domestically
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exports
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goods produced domestically and sold abroad
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production possibilities frontier
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shows various amounts of output that an economy can produce
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absolute advantage
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the ability to produce a good using fewer inputs than another producer
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opportunity cost
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cost of whatever must be given up to obtain some item
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comparative advantage
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the ability to produce a good at a lower opportunity cost than another producer
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law of demand
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other things equal the quantity demanded of a good falls when the price of the good rises
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market
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a group of buyers and sellers of a particular good or service
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competitve market
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a market in which there are many buyers and sellers so that each has a negligible impact on the market price
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monopoly
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market with only on seller who sets the price
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