Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
66 Cards in this Set
- Front
- Back
|
What is c.p.
|
only one variable changes, all others held constant
|
|
|
What is Macroeconomics
|
the study of events that affect the economy as a whole
|
|
|
What are basic questions addressed in Macroeconomics
|
GDP, cost of living, inflation, interest, adn monetary policy, taxation, adn fiscal policy
|
|
|
What is Microeconomics
|
the study of smaller part of the economy
|
|
|
What are basic questions addressed
|
how markers function, firm behavior, and comsumer behvaior
|
|
|
What is a key issue in the study of economics
|
Scarcity,
|
|
|
What is Scarcity
|
never enough to go around, people want more than they can have, and limited resources
|
|
|
What are economic resources
|
are those items used in the production of good and services that stasify wants
|
|
|
Examples of resources
|
Lands, labor, capital, and enterprenerusip
|
|
|
What are 3 basic questions of economics
|
1. What will be produced
2. How will it be produced 3. Who will consume it |
|
|
Efficency is needed B/C resouces for proudction of good and services are limited we must
|
make chocies about what goods and services will be produes and how resources will be used to produce them
|
|
|
What questions apply to efficiency
|
Questions 1 &2. ---What will be produced, and how will it be prodcued
|
|
|
What is question of equity
|
b/c of scaricty, we must decide who will consume the good, and sevices produced, or how thye will be allocated or distributed
|
|
|
What is capitalism
|
market based economy
1. private ownership 2. freedom of choice 3. competition 4. Reliance on markerts to answer 3 basic question |
|
|
IS there buyers and sellers in captalism
|
YES
|
|
|
What is demand
|
WILLINGESS and ABILITY to comume goods and services
|
|
|
What is demand driven by,
|
unlimited wants and needs,
|
|
|
Consumer demand for a good or service is influenced by
|
price of good, or service, income, tastes, and price of other goods and services
|
|
|
What is Law of Demand
|
consumers will buy more of a good or service as the price decreases, quanitity DEMANDED variers INVERSELY with price
|
|
|
What is utility, and comsumers are belived to be
|
refers to the value or satisfaction a person gets from consuming a good or a service----consumers are utility maximziers
|
|
|
What is Marginal Utility
|
the value of consuing one additional unit of a good or service
|
|
|
What is marginal vs average(BAD)
|
how much will we get from next decision vs, how much utility is ually achcied
|
|
|
What is the Law of Diminishing Marginal Utility
|
the more you consume, eventually the lower amount of satisfaction you get from each additional unit
|
|
|
What is the quantity demand for diminishing marginal utility
|
as the value or satifaction of consuming an additional unit of a good or service decreases with each additional consumed, the PRICE the consumer is willing to PAY also decreases (DOWNSLOPING DEMAND CURVE)
|
|
|
What is utility maximizing rule
|
consumers will make chocices so that marginal utility of good A divided by price of good A is EQUAL to B/B
|
|
|
What happens when marginal utility received from good A is > B,
|
then consumer can gain more statifaction by consuming one more unit of good A
|
|
|
What is opportunity cost
|
the value of the next best alternative use of the resource used in producing a good or serivce (EVERYTHING cost something)
|
|
|
What are substitutes, and effects on utility
|
interchagneable good and service--consumer receive simialr levels of utility from either good or service
|
|
|
What are completments
|
good that are consumed together--use of one means use of the other
|
|
|
What is elasticity
|
how responsive is demand for a good or service to a change in some factor that has an impact on demand
|
|
|
What is own-price elasticity
|
change in quantity demanded for a good given a chagne in price of that good
|
|
|
What is ED=
|
%Change in QD/%Change in price
|
|
|
If Elastic [ED] >1
|
% change in QD > %change in price
|
|
|
What is inelastic
|
<1, change in price> change in QD
|
|
|
What is unit elastic
|
=1.0, the % change in quanity demanded=% change in price
|
|
|
What is Economics
|
the Study of how resourceds are distributed among competing alternative uses in order to satsify human wants
|
|
|
How is economics evaluation or investigated
|
systematic manner
|
|
|
What is income elasticity of demand
|
change in demand for a good given a change in income
|
|
|
Income Elasticity of Demand=
|
%change in DEMAND/%change in income
|
|
|
What role does have on norma and cyclical goods
|
increase in income, leads to an increase in demand
|
|
|
For Income elasticity of demand as income increase
|
consumers are willing to purchase more
|
|
|
What effects does Income elasticity have on Demand curve
|
SHIFT--no change in price
|
|
|
What happens to inferior good with increase in income
|
an increase in income, leads to a DECREASE in DEMAND
|
|
|
What effect do inferior good have on demand curve
|
SHIFT TO LEFT
|
|
|
What is CROSS-Price elasticity
|
change in QUANTITY demand for a good given a change in prices of OTHER GOODS
|
|
|
What happens to substitues in cross price elasticity
|
increase in price of one good, will result in an increase in demand of another
|
|
|
What happens to complements in cross price elasticity
|
INDIRECT--increase in price of one, will lead to decrease in demand for the other
|
|
|
Differance between change in quantity demanded and QUANTITY
|
quantity demanded=price change, and movememt along line
quanity--everything but price, SHIFT in entire demand curvfe |
|
|
What is production possiblities curve
|
represents possible combinations of 2 goods, that can be made in a given time period, increasing quanity of one, decrease quanity of other
|
|
|
What are point below curve indicative of prodcution possible, on curve, and above
|
below--inefficent use of resource
on--efficent use of resource above--unattainable level |
|
|
What is law of supply
|
as the price of a good or serive icnrease, the quanity a firm is willing to supply increase
|
|
|
How does a firm maximize profits
|
minimzie cost, and total revenue is greater than total cost
|
|
|
What is marginal output
|
is the increase in output with a one unit increase in the input of a factor
|
|
|
What is diminishing marginal returns and terms of cost
|
increase production of one good, there a poitn where inefficiences occur--costs are rising faster than output
|
|
|
As the profit decreases on additonal units produced, what is require
|
a higher price is required as an incentive to produce that unit
|
|
|
What effect does Law of Diminshing returns have on supply curve
|
UPSLOPING---firms are will to supply more good at higer prices
|
|
|
What is the market
|
markets exist where there are buyers adn sellers willing and able to produce adn consume a good or service
|
|
|
What do buyers want ideally
|
maximize satisfaction--EXPLAINS behavior
|
|
|
What do sellers want ideally
|
maximize profits--EXPLAIN behavior
|
|
|
What is the market equlibrium
|
werhe firms and comsumer aggree
|
|
|
What types of markets exist
|
Perfect Competition, Monopolistic competition, Oligopoly, and Monoply
|
|
|
What are characteristic that define markets
|
producers, type of product, barriers to entry, non-price compeition, and control over price
|
|
|
In perfect compeition do comsumers pay full price
|
YES
|
|
|
What is total number of buyers and sells in perfect competition
|
LARGE number of buyers, adn sells are small relative to market
|
|
|
Is prodcut standrad and no barrier to enter perfect competition
|
YES
|
|
|
Is there some degree of government involvment in our market
|
YES
|
