Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
35 Cards in this Set
- Front
- Back
|
Laissez faire
|
Let it be
|
|
|
Caveat Emptor
|
Buyer beware
|
|
|
ceteris paribus
|
other things equal
|
|
|
marginal analysis
|
comparisons of marginal benefits and marginal costs
|
|
|
scientific method
|
1.observing
2.form hypothesis 3.test hypothesis 4.accept or modify hypothesis based on comparisons 5.continue to test hypothesis against the facts |
|
|
economics
|
social science concerned with how individuals, institutions, and society make choices under conditions of scarcity
|
|
|
microeconomics
|
concerned with indiv units such as a person, household, etc.
|
|
|
macroeconomics
|
examines economy as whole or its basic subidivisions or aggregates; total output, total employment, total income, aggregate expenditures
|
|
|
opportunity costs
|
in order to obtain more of one thing, society forgoes opportunity of getting the next best thing
|
|
|
budget line
|
schedule or curve that shows various comb of 2 products a consumer can purchase with specific money income
|
|
|
command system
|
communist/socialist
-communist manifesto -government owns most factors of production -economic decisions made by a central governing body -indiv should contribute to best of ability and receive based on need |
|
|
market system
|
Capitalism
-Adam Smith's invisible hand -privately owned -market and prices are used to direct/coordinate economic activities -participants act in their own self interest resulting in competition among independent buyers/sellers of each -specialization -use of money -active but limited govt |
|
|
key features of market system
|
-private property
-freedom of enterprise -freedom of choice -self interest -competition -market -technology and capital goodds |
|
|
consumer sovereignty
|
consumer are sovereign--dollars vote
|
|
|
adam smith's invisible hand
|
in a market system, firms and resource suppliers will simultaneously promote the public or social interest
|
|
|
law of demand
|
other things equal, as price falls, quantity demanded rises and as price rises, quantity demanded falls
|
|
|
law of supply
|
other things equal, as price rises, quantity supplied rises, as price falls, quantity supplied falls -- positive relationship
|
|
|
5 determinants of demand
|
1.consumers tastes
2.number of consumers in market 3.consumers incomes 4.prices of related goods 5.expected prices |
|
|
normal goods
|
goods whose demand increases or decreases directly with changes in income
|
|
|
inferior goods
|
goods whose demand increases/decreases inversely with money income
|
|
|
substitute good
|
one that can be used in place of another good
|
|
|
complementary good
|
one that is used together with another good
|
|
|
money
|
medium of exchange that makes trade easier; convenient social invention to facilitate exchanges of goods and services
|
|
|
production possibility model
|
1. full employment
2. fixed resources 3. fixed technology 4. two goods |
|
|
Price Elasticity Formula
|
Ed=percentage change in quantity demanded of X/percentage change in price of X
|
|
|
Elastic
|
Demand is elastic if percentage change in price results in larger percentage change in qty demanded.
>1; P and TR change in opposite directions |
|
|
Inelastic
|
Specific percentage change in price produces smaller percentage change in qty demanded.
<1; P and TR change in same direction |
|
|
Unitary
|
=1
|
|
|
4 Determinants of price elasticity of demand
|
1. Time
2. Luxuries vs Necessities 3. Substitutability 4. Proportion of Income |
|
|
Total Revenue Test
|
Total amount the seller receives from the sale of a product in a particular time period;
TR=PQ Price by Qty demanded |
|
|
Production possibility curve
|
eachpoint represnt some maximum output of the two products; curve is a constraint because it shows the limit of attainable outputs
|
|
|
points on curve
|
attainable as long as economy uses all its avail resources
|
|
|
points inside curve
|
attainable but reflect less total output and are not as desirable as on the curve
|
|
|
points outside curve
|
unnattainable; greater output than the output at any point on the curve
|
|
|
6 determinants of supply
|
1. resouce prices
2. technology 3. taxes and subsidies 4. prices of other goods 5. expected price 6. # sellers in market |
