Microeconomics Intro Terms

Front 1

Factor Markets

Back 1

markets for the factors of production such as labor, capital, natural resources, and entrepreneurial ability

Front 2

Fundamental questions economy must answer.

Back 2

What goods and services will be produced?

How will the goods and services be produced?

Who will receive the goods and services produced?

Front 3

Scarcity

Back 3

a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Front 4

Factors of production

Back 4

the inputs used to make goods and services

Front 5

Entrepreneur

Back 5

Someone who operates a business, bringing together the factors of production, to produce goods and services

Front 6

Comparative Advantage

Back 6

to produce a good or service at a lower opportunity cost than competitors

Front 7

Absolute advantage

Back 7

ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

Front 8

Perfectly Competitive market

Back 8

1. Many buyers and sellers
2. All firms selling identical products
3. No barriers to new firms entering the market

Front 9

Law of supply

Back 9

increases in price cause increases in the quantity supplied and decreases in the price causes decreases in the quantity supplied

Front 10

Complements

Back 10

goods and services used together

Front 11

Demand Schedules

Back 11

a table showing the relationship between the price of a product and the quantity of the product demanded

Front 12

Firms

Back 12

suppliers of goods and services

Front 13

Market

Back 13

a group of buyers and sellers of a good or service and institution or arrangement by which they come together to trade

Front 14

Quantity Demanded

Back 14

The amount of a good or service that a consumer is willing and able to purchase at a given price

Front 15

Autarky

Back 15

a country does not trade with other countries

Front 16

Economic Variable

Back 16

something measurable that can have different values such as the wags of software programmers

Front 17

Household

Back 17

consists of all individuals in a home. Households are suppliers of factors of production

Front 18

Equity

Back 18

the fair distribution of economic benefits

Front 19

Income effect

Back 19

change in quantity demanded that results from the effect of a change in the goods price on consumers purchasing power

Front 20

Economic model

Back 20

simplified version of reality used to analyze real-world economic situations

Front 21

Competitive market equilibrium

Back 21

a market equilibrium with many buyers and many sellers

Front 22

Trade

Back 22

act of buying and selling

Front 23

Mixed economy

Back 23

economic decisions result from the interaction of buyers and sellers in maker, but in which the government plays a significant role in the allocation of resources.

Front 24

Macroeconomics

Back 24

the study of an economy as a whole, including topics such as inflation, unemployment, and economic growth

Front 25

External economies

Back 25

reductions in a firms costs that result from an increase in the size of an industry

Front 26

Circular-flow diagram

Back 26

a model that illustrates how participants in markets are linked

Front 27

Normative Analysis

Back 27

what ought to be

Front 28

Terms of trade

Back 28

the ratio at which a country can trade its exports for imports from other countries

Front 29

Surplus

Back 29

quantity supplied is greater than quantity demanded

Front 30

Opportunity cost

Back 30

the highest-valued alternative that must be given up to engage in an activity

Front 31

Microeconomics

Back 31

the study of how households, and firms, make choices, how they interact with markets, and how the government attempts to influence their choices

Front 32

Positive analysis

Back 32

What is?

Front 33

Demographics

Back 33

the characteristics of a population with respect to age, race, and gender

Front 34

Ceteris paribus condition

Back 34

when analyzing the relationship between two variable, other variables must remain constant

Front 35

Market Demand

Back 35

the demand by all the consumers of a given good or service

Front 36

Demand curve

Back 36

a curve that shows the relationship between the price of a product and the quantity of the product demanded

Front 37

Market economy

Back 37

decisions of households and firms interacting in markets allocate economic resources

Front 38

World Trade Organization

Back 38

international organization that oversees international trade agreements

Front 39

Shortage

Back 39

quantity demanded is greater than the quantity supplied

Front 40

Voluntary Exchange

Back 40

buyer and seller are made better off by transaction

Front 41

Substitution effect

Back 41

the change in quantity demanded of a good that results from a change in price, makeing the good more or less expensive compared to subsitutes

Front 42

Centrally planned economy

Back 42

government decided how economic resources will be allocated

Front 43

PPF

Back 43

production possibilities curve. curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology

Front 44

Marginal Analysis

Back 44

analysis that includes comparing marginal benefits and marginal costs

Front 45

allocative efficiency

Back 45

occurs when production is in accordance with consumer preferences

Front 46

Market Equilibrium

Back 46

the quantity supplied equals the quantity demanded

Front 47

Free market

Back 47

a market with few government restrictions

Front 48

Quantity Supplied

Back 48

the amount of a good or service that a firm is willing and able to supply at a given price

Front 49

Technological change

Back 49

a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs.

Front 50

Economics

Back 50

the study of the choices people make to attain their goals, given their scarce resources

Front 51

Production efficiency

Back 51

occurs when a good or service is produced at the lowest possible cost

Front 52

Law of demand

Back 52

the inverse relationship between the price of a product and the quantity demanded

Front 53

Product markets

Back 53

markets for goods and services

Front 54

Inferior good

Back 54

a good for which the demand increases as income falls and decreases as income rises

Front 55

Supply schedule

Back 55

a table that shows the relationship between the price of a product and the quantity of the product supplied

Front 56

Property rights

Back 56

the rights of individuals or firms to have the exclusive use of their property including the right to buy or sell it

Front 57

Supply curve

Back 57

a curve that shows the relationship between the price of a product and the quantity of the product supplied

Front 58

Normal good

Back 58

a good for which the demand increases as income rises and decreases as income falls

Front 59

Tariff

Back 59

a tax imposed by a government on imports

Front 60

Economic growth

Back 60

the ability of the economy to increase the production of goods and services