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