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;
82 Cards in this Set
- Front
- Back
|
Scarcity
|
The situation in which unlimited wants exceed the limited resources available to fulfill those wants
|
|
|
Economics
|
The study of choices people make to attain their goals, given their scarce resources
|
|
|
Economic model
|
Simplified versions of reality used to analyze real-world economic situations
|
|
|
Market
|
A group of buyers and sellers of a good or service and the instiution or arragement by which they come together to trade
|
|
|
Marginal analysis
|
Analysis that involves comparing marginal benefits and marginal costs
|
|
|
3 important economic ideas involving people and markets
|
1) People are rational
2) People resopond to economic incentives 3) Optimal Decisions are made at the margin |
|
|
Trade-off
|
The idea that because of scarcity, producing more of one good or service means producing less of another good or service
|
|
|
The Economic Problem that every society must solve
|
1) what goods and services will be produced?
2)how will the goods and services be produced? 3) who will recieve the goods and services produced? |
|
|
centrally planned economy
|
an economy in which the government decides how economic resources will be allocated
|
|
|
market economy
|
an economy in which the decisions of households and firms interacting in markets allocate economic resources
|
|
|
Mixed economy
|
An economy in which most economic decisions result from the interaction of buyers and sellers in markets, but in which the government plays a significant role in the allocation of resources
|
|
|
Productive efficiency
|
The situation in which a good or service is produced at the lowest possible cost
|
|
|
Allocative effieciency
|
A state of the economony in whcih production reflects consumer preferences: in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.
|
|
|
Voluntary exchange
|
The situation that occurs in markets when both the buyer and seller of a product are made better off by the transaction
|
|
|
Equity
|
The fair distribution of economic benefits
|
|
|
Steps of forming an economic model
|
1. decide on the assumptions to be used in develloping the model
2. Formulate a testable hypothesis 3. Uses economic data to test the hypothesis 4. revise the model if it fails toe xplain well the economic data 5. retain the revised model to help answer similar economic questions in the future. |
|
|
economic variable
|
something measureable that can have different values, such as the wages of software programmers.
|
|
|
Positive Analysis
|
analysis concerned with what is
|
|
|
Normative Analysis
|
Analysis concerned with what ought to be.
|
|
|
Microeconomics
|
The study of how households and firms make coices how they interact in markets, and how the government attempts to influence their choices.
|
|
|
Macroeconomics
|
The sutdy of the economy as a whole, including topics such as inflation, unemployment, and economic growth.
|
|
|
Entrpreneur
|
someone who operates a business, bringing together the factors of production- labor, capital, and natural resources- to produce goods and services
|
|
|
Innovation
|
the practical application of an invention (or refers to any significant imporvement in a good or in the means of producing a good).
|
|
|
Technology
|
the processs a firm uses to turn inputs into outputs of goods and services
|
|
|
Firm
|
Organization that produces a good or service for profit
Company or business~ words are used interchangeably. |
|
|
Goods
|
tangible merchandise
|
|
|
services
|
activities done for others
|
|
|
Revenue
|
Total amount received for selling a good or service
Found by multiplying price per unit by the # of units sold. |
|
|
Opurtunity Cost
|
The highest value alternative that must be given up to engage in an activity
|
|
|
Profit
|
total revenue minus total cost
|
|
|
accounting profit vs. economic profit
|
accounting is purly numbers. Economic includes oppurtunity cost
|
|
|
Household
|
all the persons occupying a home
|
|
|
Factors of production or economic resources
|
labor, capital, human capital, natural resources (including land), entrepreurial ability.
|
|
|
Capital
|
Fiancial Capital- includes stocks and bonds
Physical Capital (econ)- includes manufactured goods that are used to produce other goods and services. |
|
|
Human capital
|
the accumulated training and skills workers possess.
|
|
|
Production possibilites frontier
|
A curve showing the maximum attainable combinations of two products that may be produced with available resources
|
|
|
What points on a Production possiblities Fronteir are there
|
Technically efficient, ineffienct, and unattainable
|
|
|
Increasing marginal opportunity cost
|
The more resources already devoted to any activity, the smaller the payoff to devoting additional resources to that activity.
|
|
|
economic growth
|
the ability of the economy to produce increasing quantities of goods and services
|
|
|
Trade
|
The act of buying or selling
~increases both their production and consumption |
|
|
Absolute advantage
|
The ability of an individual, firm, or country to produce more of a good or service than competitors using the same amount of resources.
|
|
|
Comparative advantage
|
The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.
|
|
|
Product Markets
|
Markets for goods-such as computers- and services- such as medical treatment
Households are demanders and firms are suppliers |
|
|
Factor Markets
|
Markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability
Households are suppliers, firms are demanders |
|
|
Circular- flow diagram
|
a model that illustrates how participants in markets are linked.
|
|
|
Free Market
|
A market with few government restrictions on how a good or service can be produced or sold, or on how a factor of production can be employed
|
|
|
Entrepreneur
|
Someone who operates a business, bringing together the factors of production- labr, capital, and natural resources= to produce goods and services
|
|
|
Property rights
|
The rights individuals or firms have to exclusive use of their property, including the right to buy or sell it.
|
|
|
Quantity demanded
|
The amount of a good or service that a consumer is willing and able to purchase at a given price.
|
|
|
demand schedule
|
A table showing the relationship between the price of a product and the quantity of the product demanded.
|
|
|
Demand curve
|
A curve that shows the relationship between the price of a product and the quantity of the product demanded.
|
|
|
Market demand
|
The demand by all the consumers of a given good or service
|
|
|
law of demand
|
holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease
|
|
|
Substitution Effect
|
The change in the quantity demanded of a good that results from a change in price making the good more or less expensive relative to other goods that are substitutes
|
|
|
Income effect
|
The change in the quantity demanded of a good that results from the effect of a change in the good's price on consumer purchasing power
|
|
|
Ceteris paribus
|
"all else equal" . The requirement that when analyizing the relationship between 2 variables, such as price and quantity demanded, other variables must be held constant.
|
|
|
Substitutes
|
Goods and services that can be used for the same purpose
|
|
|
Complements
|
goods that are used together
|
|
|
Normal good
|
A good for which the demand increases as income rises and decreases as income falls
|
|
|
inferior good
|
A good for which the demand increases as income falls and decreases as income rises.
|
|
|
demographics
|
the characteristics of a population with respect to age, race, and gender
|
|
|
an ↑ in price of a substitute good will shift the demand curve...
|
to the right, consumers buy less of the subsitute good and more of this good
|
|
|
an ↑ in price of a complementary good will shift the demand curve...
|
left, consumers buy less of the complementary good and less of this good
|
|
|
an ↑ in income (when a good is normal) will shift the demand curve...
|
right consumers spend more of their higher income on the good
|
|
|
an ↑ in income (when a good is inferior) will shift the demand curve...
|
left, consumers spend less of their higher income on the good
|
|
|
an ↑ in taste for the good will shift the demand curve...
|
right, consumers are willing to buy a larger quantity of the good at every price
|
|
|
an ↑ in population will shift the demand curve...
|
right, additional consumers result in a greater quantity demanded at every price
|
|
|
an ↑ in expectant price of a good in the future will shift the demand curve...
|
right, consumers buy more of the good today to avoid the higher price in the future.
|
|
|
quantity supplied
|
the amount of a good or service that a firm is willing and able to supply at a given price
|
|
|
supply schedule
|
a table that shows the relatinonship between the price of a product and the quantity of the product supplied
|
|
|
supply curve
|
a curve that shows the relationship between the price of a product and the quantity of the product supplied
|
|
|
law of supply
|
holding everything else constant, increases in price cause increasees in quantity supplied, and decreases in price cause decreases in the quantity supplied
|
|
|
an ↑ in price of an input will shift the supply curve...
|
left, the costs of procuing the good rise
|
|
|
an ↑ in productivity will shift the supply curve...
|
right, the costs of producing the good fall
|
|
|
an ↑ in the price of a subsitute in production will shift the supply curve...
|
left, more of the substitue is produced and less of the good is
|
|
|
an ↑ in the expected future price of the goodwill shift the supply curve...
|
left, less of the good will be offered for sale today to take advantage of the higher price in the future
|
|
|
an ↑ in the number of firms in the market will shift the supply curve...
|
right, the additional firms result in a greater quantity supplied at every price
|
|
|
Technological change
|
change in the ability of a firm to produce a give level of output with a given quantity of inputs
|
|
|
Market equilibrium
|
a situation in which quantity demanded equals quantity supplied
|
|
|
competitve market equilbriu
|
a market equilibrium with many buyers and many sellers
|
|
|
surplus
|
a situation in which the quantity supplied is greater then the quantity demanded
|
|
|
shortage
|
a situatino in whcih the quantity demanded is greater than the quantity supplied
|
