Microecon Ch.1,2,3

Front 1

example of a positive relationship

Back 1

hours driven per day & the distance traveled

Front 2

example of a negative relationship

Back 2

amount of drinks per week and your GPA

Front 3

y= 50-5x. what is the dependant and independant variable, the constants, the intercept term and the slope term

Back 3

dependant variable=Y

independant variable=x

constants=50 and 5

intercept=50

slope=-5

Front 4

explain scarcity. how do you know when a good is scarce? is there a relationship between scarcity and cost of obtaining the item?

Back 4

there are unlimited wants relative to the resources that are available to produce those wants. Its something that's not freely available.

a good is scarce when the amount people desire exceeds the amount available at a zero price

yes. the more scarce it is the more expensive it is going to be.

Front 5

explain rationing.

Back 5

how do decide who gets what out the scarce resources. artificial control on the distribution.

ex. the top bidder on ebay wins because he has the most money

Front 6

explain economizing

Back 6

how to best allocate scarce resources among competing ends.

Front 7

explain what a free economic good is and when you know it is a free economic good

Back 7

something that is not scarce, and therefore available without limits. ex. air, gravity, webpages.

when there are more available than the amount wanted.

Front 8

explain economic resources

Back 8

land-natural resources

labor-humans working with their body's and minds

capital-(physical)=items/tools and (human)=educated/trained

entrepreneur- innovaters and risk-takers

Front 9

explain what a market is

Back 9

are the means by which buyers and sellers carry out exchange

Front 10

explain what marginal analysis is

Back 10

it means additional or incremental. You always compare the marginal benefits to the marginal costs. if mb>mc then do it... if not then dont

Front 11

explain rational self-interest

Back 11

acting in a way that is the most personally beneficial.

Front 12

explain ceteris paribus

Back 12

other things constant / other things are the same for everyone in the competition.

Front 13

economics is

Back 13

how people use their scarce resources to satisfy their unlimited wants.

Front 14

microeconomics is

Back 14

looking at the economy individual units and how they make their decisions

Front 15

macroeconomics is

Back 15

we look at the big picture

Front 16

what is the association is causation fallacy. give an example

Back 16

the incorrect idea that if two variables are associated in one time, one must cause the other

ex. straight teeth causes good grades

Front 17

what is the fallacy of composition. give an example

Back 17

incorrect belief that what is good for one is good for everyone.

ex. if i stand to get a better view, everyone else will too

Front 18

the problem of ignoring secondary effects. give an example

Back 18

unintended consequences of economic actions that may develop slowly over time as people react to events... "you cant just do one thing"

ex. changing the laws

Front 19

who is on the demand side of the resource markets and who is on the demand side of product markets

Back 19

firms demand resources, households demand products

Front 20

define slope

Back 20

the measure of steepness. rise over run.

Front 21

define variable

Back 21

a measure, such as a price or quanity, that can take on different values at different times

Front 22

define the equation of a straight line and name each of the terms

Back 22

y=mx+b

two constants, dependent and independent variable, y-intercept, slope.

Front 23

define opportunity cost

Back 23

the next best opportunity alternative forgone.

Front 24

difference between an opportunity cost and sunk cost

Back 24

sunk cost is a cost thats already been paid while and opportunity cost is the next best thing

Front 25

define transfer payments and give example

Back 25

outright grants

ex. welfare benefits, unemployment compensation

Front 26

define a firm and give example

Back 26

economic units formed by profit seeking entrepreneurs

ex. factories, mills, a restaurant, a store

Front 27

define the ability to pay principle of taxation

Back 27

the higher the income the more you pay

Front 28

define the benefits received principle of taxation

Back 28

those who get more from the government program should pay more.

Front 29

define utility

Back 29

the satisfaction received from consumption; sense of well being.

Front 30

define market failure

Back 30

a condition that arises when the unregulated operation of markets yields socially undesirable results. in other words too many of some goods and too few of other goods get produces

Front 31

define natural monopoly

Back 31

one firm that can supply the entire market a lower per-unit cost than could two or more firms.

Front 32

define monetary policy

Back 32

regulation of money supply

Front 33

define fiscal policy

Back 33

the use of government purchases, transfer payments, taxes, and borrowing to influence economy wide variables such as inflation, employment, economic growth

Front 34

define incidence of a tax

Back 34

the distribution of tax burden among taxpayers; who ultimately pays the tax

Front 35

define tariff

Back 35

a tax on imports

Front 36

define quota

Back 36

a legal limit on the quanity of a particular product that can be imported or exported

Front 37

define foreign exchange

Back 37

foreign money needed to carry out international transactions

Front 38

define balance of payments

Back 38

a record of all economic transactions during a given period between residents of one country and residents of the rest of the world

Front 39

define exchange rate

Back 39

measures the price of one currency in terms of another.

Front 40

define merchandise trade balance

Back 40

the value during a given period of a country's exported goods minus the value of its imported goods

Front 41

define marginal tax rate

Back 41

the percentage of each additional dollar of income that goes back to the tax

Front 42

define progressive tax

Back 42

the higher the income the higher the taxes

Front 43

define regressive tax

Back 43

the percentage of income paid in taxes decreases as income increases

Front 44

define proportional tax

Back 44

the tax as a percentage of a income remains constant as income increases; also called a flat tax