Economics Chapt 1-5

Front 1

Circular Flow Diagram

Back 1

a visual model of the economy that shows how dollars flow through markets amount households and firms

Front 2

macroeconomics

Back 2

the study of economy wide phenomena, including inflation, unemployment, and economic growth

Front 3

microeconomics

Back 3

the study of how households and firms make decisions and how they interact in markets

Front 4

normative statements

Back 4

claims that attempt to prescribe how the world should be

Front 5

positive statements

Back 5

claims that attempt to describe the world as it is

Front 6

production possibilities frontier

Back 6

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

Front 7

absolut advantage

Back 7

the ability to produce a good using fewer inputs than another producer

Front 8

comparative advantage

Back 8

the ability to produce a good at a lower opportunity cost than another producer

Front 9

exports

Back 9

good and services that are produced abroad and sold domestically

Front 10

opportunity cost

Back 10

whatever must be given up to obtain some item

Front 11

competitive market

Back 11

a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker

Front 12

complements

Back 12

tow goods for which an increase in the price of one leads to a decrease in the demand for the other

Front 13

demand curve

Back 13

a graph of the relationship between the price of a good and the quantity demanded

Front 14

demand schedule

Back 14

a table that shows the relationship between the price of a good and the quantity demanded

Front 15

equilibrium

Back 15

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

Front 16

equilibrium price

Back 16

the price that balances quantity supplied and quantity demanded

Front 17

equilibrium quantity

Back 17

the quantity supplied and the quantity demanded at the equilibrium price

Front 18

inferior good

Back 18

a good for which, other things equal, an increase in income leads to a decrease in demand

Front 19

law of demand

Back 19

the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises

Front 20

law of supply

Back 20

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

Front 21

law of supply and demand

Back 21

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

Front 22

market

Back 22

a group of buyers and seller of a particular good or service

Front 23

normal good

Back 23

a good for which, other things equal, an increase in income leads to an increase in demand

Front 24

quantity demand

Back 24

the amount of a good that buyers are willing and able to purchase

Front 25

quantity suppled

Back 25

the amount of a good that sellers are willing and able to sell

Front 26

shortage

Back 26

a situation in wich quantity demanded is greater than quantity supplied

Front 27

substitutes

Back 27

two goods for which an increase in the price of one leads to an increase in the demand for the other

Front 28

supply curve

Back 28

a graph of the relationship between the price of a good and the quantity supplied

Front 29

supply schedule

Back 29

a table that shows the relationship between the price of a good and the quantity supplied

Front 30

surplus

Back 30

a situation in which quantity supplied is greater than quantity demanded

Front 31

cross-price elasticity of demand

Back 31

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

Front 32

elasticity

Back 32

a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants

Front 33

income elasticity of demand

Back 33

a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income

Front 34

price elasticity of demand

Back 34

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

Front 35

price elasticity of supply

Back 35

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in price quantity supplied divided by the percentage change in price

Front 36

total revenue(in a market)

Back 36

the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold