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39 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Economy |
Well-functioning system for activities |
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Market Economy |
No one tells anyone what to produce and where to send it/free to choose |
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Command Economy |
Central authority in charge of decisions |
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Microeconomics |
How individuals make decisions and how those decisions interact |
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Macroeconomics |
Overall ups and downs in the economy/how policy lessens damages |
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Resources |
Anything that can be used to produce something else Land, Labor, Capital, Human Capital |
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Scarcity |
In short supply |
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Opportunity Cost |
What you must give up in order to get something |
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Trade Off |
Comparison of costs and benefits of doing something |
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Incentive |
Anything that offers rewards to people who change their behavior |
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Specialization |
Each person specializes in the task that he or she is good at performing |
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Efficiency |
Taking all opportunities to make some people better off without making other people worse off |
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Equity |
Everyone gets his or her fair share |
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Equity and Efficiency |
Often at odds |
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Model |
A simplified representation of a real situation that is used to better understand real life situations |
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Production Possibilities Frontier |
Shows the combinations of two goods that are possible for a society to produce at full employment |
PPF |
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Causes of Economic Growth |
1) Increase in factors of production: resources used to produce goods and services 2) Better technology: technical means for producing goods and services |
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Comparative Advantage |
Someone has comparative advantage when they have the lower opportunity cost |
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Competitive Market |
Had many buyers and sellers of the same good or service, none of whom can influence the price |
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Law of Demand |
1) When price falls, quantity demanded rises 2) When price rises, quantity demanded falls |
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Ceteris Paribus |
Holding everything else constant |
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Substitution Effect |
Change in price makes the good more or less expensive relative to other goods that are substitutes |
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Income effect |
Change in price increases or decreases consumer's purchasing power |
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DEMAND SHIFTERS |
1) Income 2) Prices of related goods or services 3) Tastes 4) Number of consumers 5) Expectations |
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Normal Good |
Demand increases/decreases when income increases/decreases |
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Inferior Good |
Demand decreases/increases when income increases/decreases |
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Substitutes |
Two goods are________if a decrease/increase in price of one leads to a decrease/increase in demand for the other |
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Complements |
Two goods are_______if a decrease/increase in price of one good leads to an increase/decrease in the demand for the other |
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Complementary Goods |
Often bought together |
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Tastes |
Seasonal changes or fads have a predictable effect on demand |
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Changes in Number of Consumers |
As population changes, number of buyers of a particular good also changes--> changing demand |
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Expectations |
Buyers adjust current spending in anticipation of the direction of future prices in order to obtain the lowest possible price |
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Supply |
Represents the behavior of the sellers |
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Supply Curve |
Shows quantity supplied at various prices |
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Quantity Supplied |
Quantity producers are willing and able to sell at a particular price |
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Law of Supply |
Increases/Decreases in price cause increases/decreases in the quantity supplied |
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SUPPLY SHIFTERS |
1) Input Prices 2) Technology 3) Prices of related goods or services 4) Number of producers 5) Expectations |
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Input Prices |
Decrease/Increase in price of an input increases/decreases profits and encourages/discourages more supply |
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PAGE 22 |
Changes in tech |
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