Fmsc 290

Front 1

unlimited ends vs. limited means

Back 1

ends-goals/objectives/accomplishments(unlimited)

means-resources available to achived ends(limited)

Front 2

choice dilemma

Back 2

what is being produced?

How is it being produced?

For whom is it being produced?

Front 3

Capitalist economy

Back 3

Freedom
Self Interest
private property
specialization
trade
money
price

Front 4

Demand vs. Needs & Wants

Back 4

needs and wants expressed by willingness and ability to pay the price

Front 5

Demand vs. Quantity Demanded

Back 5

relationship between price and quantity demanded

Front 6

invisible hand

Back 6

individual maximizes revenue for himself, creating revenue for whole society

Front 7

Law of Demand

Back 7

-inverse relationship between price and quantity demanded

Income effect and substitution effect

Front 8

income effect

Back 8

price of an item rises c.p, consumers real income falls making him unable to afford as many units of an item

nominal income-money sense

real income-use value

Front 9

substitution effect

Back 9

as price rises, c.p., oppurtunity cost pf making a purchase will rise motivating the consumer to swithc to something else

Front 10

determinants of demand (5)

Back 10

1.consumer tastes and preferences
2.comsumer incomes
3.number of consumers
4.price of related good
5.anticipated price changes

Front 11

supply vs quantity supplied

Back 11

relation between price of an item and resulting quantity supplied

Front 12

law of supply

Back 12

direct relationship between price and quantity supplied

2 forces causing direct relationship:
1. profits effect
2.substitution effect

Front 13

profits effect

Back 13

as price of item increases, c.p., profts from production of item also rises, attracting more firms to the industry

Front 14

accounting proftis

Back 14

accounting profits=(P x Q)-(total cost)

Front 15

economic profits

Back 15

economic profit=(P x Q)- (explicit costs and implicit costs)

Front 16

substitution effect (supply)

Back 16

as price increases, c.p., firm will change product mix, producing more of that item whose prices increased & less of some other item

Front 17

Determinants of Supply

Back 17

1.Technological Change
2.Production Cost (prices of resources and business taxes)
3.# of producers
4.price of related goods (substitutes & joint goods)

Front 18

substitutes

Back 18

good that are made with same resources

Front 19

jointly produced

Back 19

goods that are produced as a result of producing another good....BY PRODUCT (hotdogs)