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38 Cards in this Set
- Front
- Back
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Economics |
social science concerned with how individuals, firms, and society make optimal decisions under conditions of scarcity |
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Macroeconomics |
economy as a whole or basic subdivisions |
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Microeconomics |
examines particular individual, firm, household, and examines decision making |
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Economic Perspective |
1. Scarcity and Choice 2. once must choose what we have and what we must forgo |
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Opportunity Cost |
forgone opportunity to have one "thing" because we choose to have another |
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People are Utility Maximizers (Utility) (economic perspective) |
anything that brings pleasure or satisfaction obtained from consuming good or service |
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People are rational and self interested (economic perspective) |
rational DOES NOT = perfect self interested: decisions made to benefit decisions maker |
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Marginal |
extra, additional, change in (ex: get paid 10 per hour you work an extra hour your marginal is $10) |
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All-Else-Equal (caters paribus) |
change one thing and everything stays the same |
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Positive Economists |
"What is" Facts |
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Normative Economists |
"What should be" Theoretical |
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Budget Constraint |
"Budget Line"
Our wants exceed our means Income is limited |
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Maximize Utility |
One must spend all the income
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Indifference Curve
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Gives costumer equal satisfaction and utility
Used because we have no idea what utility is |
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Change In income
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Parallel shift in budget line
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Demand |
Schedule or curve that shows relationship between quantity demand and price of good or service |
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Allocative Efficiency |
right goods/services are being used on the right ways |
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Ethical Wealth |
equal: communism opportunity : capitalism need: socialism (you cut I choose) |
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technological advances |
more product give the same set of resources |
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Factors of Production |
1. Labor 2. Land 3. Capital 4. Entrepreneurial Ability |
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Production possibility model |
visual economizing problem for society |
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Assumptions of Production Model |
1. full employment of resources 2.fixed resources 3. fixed technology 4.two goods |
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Consumer goods |
satisfies wants directly (ex: pizza) |
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Capital goods |
satisfies wants indirectly
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Law of Increasing Opportunity Cost |
the more goods/services we produce the higher the opportunity cost for producing more of that good or service |
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Simple Market Assumptions |
1. No government 2. Closed economy (no trade) |
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Households (simple market) |
own land, labor, capital, entrepreneurial ability |
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Firms |
provides goods or services |
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Resource Market |
Buyers: Firms Sellers: Households |
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Product Market |
Buyers: households Sellers: firms |
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Demanders |
consumers or buyers of good or service |
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Factors Shifting Demand Curve |
1. tastes (+) 2. # of consumer (+) 3. income (+(superior good)/-(inferior good)) 4. price of compliment (-) 5. price of substitute (+) 6. expected income (+ 7. expected price (+) |
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Supply |
Schedule or curve that shows the various quantities produces are willing to make available for sale at each of a series of possible prices |
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Law of Supply |
prices and quantity supplied are positively related |
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Law of Demand |
prices and quantity demanded are negatively related |
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change in demand |
movement along supply curve
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change in supply |
movement along demand curve |
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Factors Shifting Supply Curve |
1. #sellers (+) 2. taxes (-) 3. technology (+) 4.subsidices(+) 5. expected price (+/-) 6. price of other goods (-) 7. price of resources (-) |
