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108 Cards in this Set
- Front
- Back
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Microeconomics |
The study of the economy at the small-scale level examining individuals and specific markets |
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Macroeconomics |
The study of the economy at the large scale level,output, the price level, and other aggregate measures of the economy |
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Scarcity |
A condition that results from the inability of limited resources to satisfy unlimited wants |
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Positive economics |
Economic statements that are factual |
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Normative economics |
Economics statements that involve value judgments |
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Resource |
Any item,whether a gift of nature, the result of production, or the result of human effort that is used to produce good or services |
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Land |
All natural resources used in production, sometimes referred to as “gifts of nature” |
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Labor |
All physical and mental activity devoted to producing goods and resources |
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Capital |
Tools, machinery infrastructure, and knowledge used to produce goods and services |
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Entrepreneurial Ability |
The talent or ability to combine land,labor, and capital to produce goods and services |
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Relative Scarcity |
The comparison of one good, service, or resource to that of another |
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Marginal Decision Making |
The process of making choices in increments by evaluating the additional, or marginal, benefit against the additional, or marginal, cost of an action |
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Optimization |
The idea that people make choices in order to maximize the overall benefit, or utility, of an action to its cost |
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Self-interest |
The idea that people choose to do things that interest them |
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Production Possibilities Schedule |
A table that shows the possible combination of two different goods or services that can be produced with fixed resources and technology |
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Production Possibilities Frontier |
A graph that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology |
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Comparative Advantage |
The ability to produce a good or service at a lower relative opportunity cost than that of another producer |
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Specialization |
The result of a low cost producers focus all their efforts in producing a single good or service |
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Terms of Trade |
The price of one good, service, or resources in terms of another |
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Demand Curve |
A principle in economics which states that as the price of a good, service, or resource quantity demanded will decrease, and vice versa all else held constant |
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Demand Schedule |
A chart that shows the price of the product and the quantity |
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Marginal Cost |
The additional cost associated with one more unit of an activity |
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Marginal Benefit |
The additional benefit associated with one or more unit of activity |
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Good |
Tangible product that consumers, firms, or governments wish to purchase |
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Income effect |
The effect that a change in the price of a good, service, or resource has on purchasing power of income |
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Diminishing Marginal Utility |
The negative relationship between quantity of a good, service, or resource and the marginal utility obtained from each additional unit consumed in a given period of time |
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Substitution Effect |
The effect that a change in the price of one good, service, or resource has on the demand for another |
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Subsidy |
A payment made by the government that does not necessarily require an exchange of economic activity |
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Equilibrium price |
The price at which quality supplied of a good, service, or resource equals the quantity demanded |
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Excise Tax |
The number of units purchased, not on the price paid for a good or service |
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Price ceiling |
Maximum legal price at which a good, service, or resource can be sold |
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Price Floor |
Minimum legal price at which a good, service, or resource can be sold |
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Shortage |
A situation in which the quantity demanded is greater than the quantity supplied at the current market place |
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Surplus |
A situation in which the quantity is supplied is greater than the quantity demanded a the current market price |
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Consumer surplus |
The difference between the maximum price consumers are willing and able to pay for a good or service and the price they actually pay |
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Deadweight Loss |
The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium |
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Producer Surplus |
The difference between the price producers receive for a good or service and the minimum price they are willing and able to accept |
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Allocative Efficiency |
Producing the goods and services that are most wanted by consumers in such a way that their marginal benefit equals their marginal cost |
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Productive Efficiency |
Producing output at the lowest possible average total cost of production |
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Market Supply |
The overall, or total, supply of a good, service, or resource |
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Law of Demand |
A principle in economics that states that as the price of a good, service, or resource rises, quantity demanded will decrease, and vice versa |
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Law of supply |
States that as the price of a good, service, or resource rises, the quantity supplied is increased, and vice versa |
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Util |
A subjective measure of the utility associated with consuming a good or service |
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Utility |
The satisfaction of happiness received from the consumption of goods and services |
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Totally Utility |
The total amount of satisfaction |
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Utility Maximization |
The process of obtaining the greatest level of overall satisfaction or happiness from consuming goods and services, subject to consumers |
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Equal Marginal Principle |
The idea that consumers maximize their utility when they allocate their limited incomes so that the marginal utility per dollar spend on each of their final choices |
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Budget Line |
A line showing the different combinations of two products that can be purchased with a given budget at a known sweet of prices |
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Indifference curve |
A curve that shows the combinations d two products that generate the same amount of total utility or satisfaction |
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Short run |
The time period in which at least one input of production is fixed but other inputs can be changed |
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Variable Costs |
Costa that change with the amount of output produced, increasing as production increases and decreasing as production decreases |
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Quota |
A mineral limit on the amount of a good that can be imported |
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Tariff |
A tax or fee that must be paid on goods imported from other countries |
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Explicit costs |
Payments made by individuals, firms, and government for use of land, labor, and capital |
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Perfect price discrimination |
The practice of charging each and every consumer the price that is willing and able to pay for a good or service |
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2nd degree price discrimination |
Practice of charging different prices per unit for different quantities, or blocks, of a good or service |
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Economic surplus |
The measure of the total welfare, or wealth, that trade creates for consumers and producers in a market |
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Cross-price elasticity of demand |
A measure of effect of a change in the price of one product on the quantity demanded for another |
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Elasticity |
A measure of how responsive one variable is to a change in another variable |
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Inelastic demand or supply |
Price elasticity of demand and supply less than 1 absolute value |
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Inelastic demand or supply |
Price elasticity of demand and supply less than 1 absolute value |
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Inferior good |
A good for which there is an inverse relationship between demand and for the good and income |
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Long run |
Time period in which all inputs of production can be changed |
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Perfectly elastic demand and supply |
Infinite price elasticity of demand and supply |
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Perfectly inelastic demand and supply |
A measure about how responsive quantity demanded and supplied to a change in price |
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Unit elastic demand and supply |
Price elasticity of supply or demand equal to 1 |
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externality |
The benefit enjoyed by or cost imposed on a third party not directly involved in the production or consumption of a good or service |
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externality |
The benefit enjoyed by or cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Market failure |
A situation in which a market fails to produce the efficient level of output that maximizes total surplus |
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externality |
The benefit enjoyed by or cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Market failure |
A situation in which a market fails to produce the efficient level of output that maximizes total surplus |
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Free rider problem |
The idea that when a good is nonexcludable, people will choose to consume the good without paying for it, making it difficult for private companies to profitably proves the good |
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Negative externality |
The uncompensated cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Negative externality |
The uncompensated cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Nonexcludable |
A characteristic of some goods or services whereby people cannot easily be prevented from consuming the good or service |
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Negative externality |
The uncompensated cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Nonexcludable |
A characteristic of some goods or services whereby people cannot easily be prevented from consuming the good or service |
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Non rival |
He characteristic of some goods or services whereby he consumption of the good or service by one person does not diminish the amount available to someone else |
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Negative externality |
The uncompensated cost imposed on a third party not directly involved in the production or consumption of a good or service |
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Nonexcludable |
A characteristic of some goods or services whereby people cannot easily be prevented from consuming the good or service |
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Non rival |
He characteristic of some goods or services whereby he consumption of the good or service by one person does not diminish the amount available to someone else |
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Platitude externality |
The unpaid benefit enjoyed by a third party not directly involved in the production or consumption of a good or service |
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Public good |
Any good or service that is both non rival and nonexcludable |
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Diseconomies of scale |
A condition in which the long run average total cost of production increases as production increases |
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Economies of scale |
A condition in which they lobs run average total cost of production decreases as production increases |
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Fixed costs |
Costs hat do not change with the amount of output produced |
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Variable costs |
Costs that change with the amount of output produced, increasing as production increases and decreases as production descreses |
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Perfect competition |
A market structure characterized by the interaction of large numbers of buyers and sellers |
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Perfect competition |
A market structure characterized by the interaction of large numbers of buyers and sellers |
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Price takers |
Firms that take or accept they market price and have no ability to influence that price |
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Shutdown point |
The price below which a firm will choose not to operate in the short run. |
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Shutdown point |
The price below which a firm will choose not to operate in the short run. |
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Barriers to entry |
Any impediments that prevent firms from entering a market or industry |
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Shutdown point |
The price below which a firm will choose not to operate in the short run. |
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Barriers to entry |
Any impediments that prevent firms from entering a market or industry |
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Economic profit |
The level of profit that occurs when total revenue is greater than total cost |
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Shutdown point |
The price below which a firm will choose not to operate in the short run. |
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Barriers to entry |
Any impediments that prevent firms from entering a market or industry |
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Economic profit |
The level of profit that occurs when total revenue is greater than total cost |
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Monopoly |
A market structure characterized by a single seller producing a good or service for which there are no close substitutions in a market with a relatively blocked entry |
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Excess capacity |
The underutilization of resources that occurs when the quantity of output a firm chooses to produce is less than the quantity that minimizes average total cost |
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Excess capacity |
The underutilization of resources that occurs when the quantity of output a firm chooses to produce is less than the quantity that minimizes average total cost |
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Game theory |
The study of strategic behavior of decision makers |
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Oliopoly |
A market structure characterized by a few large producers, of either standardized or differentiated products |
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Derived demand |
A type of demand specific to resources that occurs as a result of the demand for the goods and services produced by those resources |
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Nominal wage |
The actual number of dollars received in exchange for ones labor |
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Real wage |
The quantity of goods and services that can be bought with ones nominal wage |
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Autarky |
A situation in which a country to any international trade |
