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42 Cards in this Set

  • Front
  • Back
Economics
deals with scarce resources
Macro
Economy Wide Variables
Micro
Small part of the economy
Captalist
Rasies the standard of living (Democracy)
Positive Statement
You can test it
Normative Statement
Opinions
False Positive
test a positive statement and it is wrong
Self-Interest Hypothesis
Individuals are interested in satisfying themselves
Ceterus Perivus
Hold everything constant except for 2 variables
Cause Effect
Just because 2 things happen together, there is no relation (tubing & bankruptcy)
Falacy of Compesition
Just because something is true for 1 thing, it isnt true for everything
Land
coal, oil, water
Labor
workers
Capital
Factories, Machines
Demand
willing and able to pay
Law of demand
as price Increases, Quanity demanded decreases
Increase in Qd=
decrease in price
Increase in Demand=
Price doesnt make demand change
Normal Demand
Same relationship (+ income = +BMW's)
Inferior Demand
Opposite relationship (+income= -Ramon Noodles)
Determinants of Demand
income, population, taste/preferences, change in related goods)
Complimentary
effects one another (Gas/H2)
Substitues
Price of Pepsi + = Coke demand +
Supply
As price increase, Qaunity supply increases
Determinants of Supply
Technology, Number of Suppliers, Change in Price of imput, Change in price of related good
Equilibrium
Supply and demand cross
If a pipe line broke...
Decrease in supply = increase in price = decrease of quantity demanded
An earthquake in relationship to water...
increase in demand = decrease in supply = increase in price
Price Floor
Price cant go below = Surplus
Price Ceiling
Price cant go above = Shortage
Elastic
More sensative (increase in syrup...changes pancakes) a number like 3.2%
Inelastic
Not sensative (increase price in cig... wont change much) a number like 1%
Elastiicy of Demand
% change quantity demand / % change price
Elasticicy of Income
% change in demand / % change income
Elasticy of Price
% change in Demand X / % change in Price Y
Law of Diminishing Marginal Utility
The satisfaction decreases
opportunity costs
highest valued alternative that must be chosen
Tradeoff
giving one good up to obtain some other good
Comparative advantage
ability of one to do something with a lower opportunity cost than another
Relative Price
price of an exchange
Inferior Goods
More expensive item Cambells vs Ramon
Law of Supply
As the price of a good increases, the quantity supplied increases