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83 Cards in this Set
- Front
- Back
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We assume that people are _____ |
rational |
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We assume that people maximize ____ or ____ |
happiness or satisfaction |
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We assume that firms _____ or _____ |
maximize profit or minimize cost |
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If marginal cost is less than marginal benefit, the person will... |
stop the activity |
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If marginal cost is more than marginal benefit, the person will... |
continue the activity |
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John could earn $20,000 per year if he does not attend SLU, the _______ cost is $20,000 |
opportunity |
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When marginal benefit equals marginal cost, _____ reaches a maximum |
total cumulative benefit |
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The price of catfish and consumption (demand) of catfish have a ____ relation |
negative |
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The price of gasoline and the supply of gasoline have a ____ relation |
positive |
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The study time and a test score are expected to have a ___ relation |
positive |
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The weight and the consumption of junk food are expected to have a ____ relation |
positive |
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If the future price for a good rises, the current demand curve will shift to the ____ |
right |
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If the income declines, the demand curve will shift to the ___ |
left |
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If population rises, the demand curve will shift to the ____ |
right |
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If income rises, but less fast foods are bought, demand curve will shift to the ___; fast foods are _____ |
left ; inferior goods |
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If income rises and more catfish is bought, the demand curve will shift to the ____; catfish are ____ |
right; normal goods |
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If the price of catfish rises, the demand curve for hot sauce will shift to the ____ |
left |
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If price of cameras rise, the demand curve for will shift to the ____ |
left |
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If the price of been meat rises, the demand curve for chicken meat will shift to the ___ |
right |
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If the energy cost rises, the supply curve will shift to the ____ |
left |
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If the future price for a good rises, the supply curve will shift to the ____ |
left |
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Technological progress will cause the supply curve to shift to the ____ |
right |
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When the strawberry season comes, its supply curve will shift to the ____ |
right |
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When the demand shifts to the right, price is ___ and quantity is ____ |
Up, up |
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When the supply shifts to the left, price is ____ and quantity is ____ |
up, down |
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When demand shifts to the right an supply shifts to the left, price is ___ and quantity is ____ |
up, unclear |
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When demand shifts to the left and supply shifts to the left, price is _____ and quantity is ___ |
unclear, down |
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If something is more elastic, should the price be raised? |
no |
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If something is less elastic, should the price be raised? |
yes |
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A flat demand curve indicates that demand is ____ |
more elastic |
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A steep demand curve indicates that demand is ____ |
less elastic |
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A vertical demand curve suggests that Qd is ___ regardless of price levels |
perfectly inelastic |
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The demand is more elastic for a ____ good and is less elastic for a _____ |
necessity |
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The demand is ____ when a good has more substitutes |
more elastic |
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A flat supply curve indicates that supply is ____ |
more elastic |
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A steep supply curve indicates that supply is ____ |
less elastic |
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A vertical supply curve suggests that Qs is _____ regardless of the price levels |
Perfectly inelastic |
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A horizontal supply curve suggests that Qs is ____ at the given price level |
Perfectly elastic |
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When demand shifts upward, a flat supply curve will cause a ____ increase in price and ____ in quantity |
smaller percent; larger percent |
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When demand shifts upward, a steep supply curve will cause a ___ increase in price and a ____ in quantity |
larger percent; smaller percent |
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Economics is a _____ science |
social |
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____ studies the actions of individuals including human behavior in the decision making process |
Economics |
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The study of how individuals and firms interact in the market and how the government attempts to influence their choices |
Microeconomics |
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The study of how the economy as a whole including topics such as national output, inflation, unemployment, economic growth, etc |
Macroeconomics |
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The study of what is |
Positive economics |
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The study of what ought to be. Individual preferences and philosophies are involved |
Normative economics |
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Study of the choices people make to achieve their goals given limited resources |
Scarcity economics |
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Group of buyers and sellers engage in transactions based on mutually agreeable terms |
Market |
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Three fundamental questions in making choices due to trade-offs: |
What goods and services will be produced? How? Who? |
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Produced at the lowest possible cost |
Productive efficiency |
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Produced based on consumer preferences |
Allocative efficiency |
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The government decides what and how much will be produced and allocated |
Centrally planned economies |
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What places used to have Centrally planned economies? |
The old USSR and the old China |
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Households and firms interact in markets and decide what will be produced |
Market economies |
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Buyers and sellers in the markets make most economic decisions but the government plays an important role in resource allocation |
Modern mixed economy |
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Which country uses a modern mixed economy? |
Modern China |
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Optimal decisions are made at the ____ |
Margin |
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Where people compare marginal benefits and marginal costs in determining whether to continue or increase an activity |
Marginal analysis |
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Producing more of one good (or service) will lead to producing less of another good (or service) |
Trade-off |
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A simplified description or version of the relationships among economic variables to analyze real world economic situations |
Economic models |
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Look over 5 elements of an economic model |
* |
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Describes he relation between the quantity demanded and the price per unit |
Demand curve |
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Sum of all individual demands at a given price per unit |
Market demand |
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The quantity demanded or purchased and the price per unit have a negative relation, other factors held constant |
Law of demand |
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A lower price makes a good less expensive relative to other substitues and leads to more purchases of the good |
Substitution effect |
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A lower price leads to increased purchasing power and more purchase of the good |
Income effect |
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Describes the relation between the quantity supplied and the price per unit |
Supply curve or schedule |
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The quantity supplied and the price per unit have a positive relations, holding other factors constant |
Law of supply |
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Measure the extent of responsiveness or reaction between 2 variables |
Elasticity |
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The difference between the maximum price a consumer is willing to pay and the actual price the consumer pays |
Consumer surplus |
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Consumer surplus represents the benefit to consumers in ____ of the price they pay to purchase the priduct |
excess |
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The difference between the minimum price a seller is willing to accept and the actual price the seller receives |
producer surplus |
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Consumer surplus + producer surplus |
Economic surplus |
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The maximum price that buyers are willing to pay; any point on the demand curve |
Value to buyers |
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The minimum price that sellers are willing to sell; any point on the supply curve |
Cost to sellers |
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Value to buyers - cost to sellers = |
Consumer surplus + producer surplus = economic surplus |
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If value to buyers is greater than value to sellers then... |
there is an inefficiently low output level; need to increase quantity and economic surplus will rise |
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If value to buyers is equal to value to sellers |
Economic surplus is maximized; efficient output |
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If value to buyers is less than cost to sellers, |
There is an inefficiently high output level, need to reduce quantity |
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The area that measures the loss of economic surplus due t less than efficient output level |
Deadweight loss |
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The legal minimum price that a product can be sold; normally greater that market equilibrium price |
price floor |
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When consumer surplus is transferred to producers |
Deadweight loss |
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Legal maximum price that can be charged; normally below the market equilibrium price |
Price ceiling |
