Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/74

Click to flip

74 Cards in this Set

  • Front
  • Back
What is Scarcity?
When resources are limited. A situation in which the amount of something available is insufficient to satisfy the desire for it.
What are Resources?
What is used to make goods and services. the labor, capital, land, natural resources, and entrepreneurship.
What are Property Rights?
What makes it possible to own resources. The rules that establish and govern the ownership of stored resources.
What is Subjective Value?
Because there are different valuations of the same object the voluntary exchange is mutually beneficial at least ex ente. Both parties believe that the exchange is mutually beneficial.
What does Ex Ente mean?
Before the exchange.
What is Microeconomics?
The study of decisions made by individual economic actors (firms, people, government).
What is Macroeconomics?
The study of how whole sectors are effected (all businesses, etc).
What are Prices and what do they do?
1. They convey information based on the fluctiations.
2. A signal to producers what it is that consumers want.
3. A signal to consumers on what and how much to buy.
4 Ration scarce resources to those individuals who value them the highest.
What is a model?
An abstract representation of reality (includes enough detail so people understand) – only crucial information that could make a difference are shown.
What is a Normative Statement?
A statement that perscribes and says what should be, they are used to make value judgements,identify problems, and perscribe solutions.
What is an Exchange?
When we get most of what we want from others instead of making it ourself.
What is a Market?
A group of buyers and sellers with the potential to trade with each other.
What is Opportunity Cost?
The HIGHEST valued alternative forgone anytime a choice is made.
What is a Comparative Advantage?
The ability to produce a service at a lower opportunity cost than producers.
What is a Specialization?
A method of production where each person concerntrates on a limited of activity.
What is the Law of Increasing Opportunity Cost?
We can only sell more of something at a higher cost.
What is the Production Possibility Frontier (PPF)?
A curve showing all comvinations of two goods that can be produced with the resources and technology currently available.
What is Change in Demand?
Change in demand means there's been a change in a factor effecting demand and therefore there is a new Quantity Demand.
What is Quantity Demand?
A change in price only. Which results in a movement along the curve to a new Price and Quantity Demand combination.
What is the Law of Demand?
All other tings equal (ceteris paribus) the quantity demanded of any good or services increases as the price of that good or service falls.
What is the Law of Supply?
All other things equal (nothing else that effects supply changes). Firms will produce and offer to sell goods or services as the price of those increase.
What is Market Supply?
Horizontal sum of individual supply curve. (same as the Market Demand)
What is Equilibrium?
The point where the market is at rest.
What is a Surplus?
When the Price is greater than the Qe and therefore Qs is greater then Qd.
What is a Shortage?
When the Price is less than the Qe and the Qs is less than the Qd.
What is a Price Ceilling (Pc)?
A price the government sets below the Pe.
What is a price Floor (Pf)?
A price the government sets below the Pe.
What is a Change in Supply?
A change in one of the factors effecting supply. Leads to a shift of the entire curve.
What is a Change in Quantity Supply?
A change in the Price only.
What is the Market Demand?
The horizontal sum of individual demands
What are the factors affecting Supply?
1. Changes in Cost of Production
2. Technology
3. Price Expectation
What are the factors affecting Demand?
1. income-(ex. a raise in salary thens able to pay full price)
2. Price of related goods- (substitutes and compliments)
3. Price expectation ( effects the price that we're willing to pay ex. if we think something is going to go on sale)
4. Tastes and preferences
What is a Change in Demand?
When there's been a change in a factor effecting demand - then there's a new Qd for every price.
What is a Change in Quantity Demand?
A change in price only. Which results in a movement along the curve to a ne P and Qd combination.
Relationship between the Price and Qd?
They are inversley related therefore when the price increases the demand increases as well.
Expectation on future price?
When you expect the price to change in some way.
What is Elasticity?
Measure of the relative responsiveness of one variable to a change in response to another variable. Tells us how much less we buy when the price increases.
What is the Price Elasticity of Demand?
For a given good Price Elasticity of Demand shows how responsive consumers are to a change in price.
What are the determinants of Price Elasticity of Demand?
1. Nature of the good (luxury or necessity) Demand for necessities are less elastic than the demand for luxuries.

2. Size of item in budget ( The more responsive to large items in budget eg. Housing. Less responsive to smaller items in budget eg. Salt)

3. Numver of available substitutes (more substitutes available, more elastic the demand)

4. time ( If you have more time you are more responsive eg. 1 day sales)
What is Cross-price Elasticity?
Substitutes or compliments to what degree are these (2) goods consumed together.
What is Elastic Demand?
A price elasticity of demand with absolute value greater than 1.
Waht is Unitary Elastic Demand?
A price elasticity of demand equal to 21.
What is Perfectly (infinitely) Elastic Demand?
A price elasticity of demand approaching minus infinity.
What is Perfectly Inelastic Demand?
A price elasticity of demand equal to 0.
What is Inelastic Demand?
A price elasticity of demand with absolute value between 0 and 1.
What is Price Elasticity of Demand?
The sensitivit of quantity demanded to price: the percentage change in quantity demanded caused by a 1-percent change in its price.
What is Price Elasticity of Supply?
The percentage change in quantity supplied of a good or service cause by a 1-percent change in price.
What is Income Elasticity of Demand?
The percentage change in quantity demanded caused by a 1-percent change in income.
What is Economic Efficiency?
Procucing some combination of goods on the PPF.
What is a shift of the entire cuve?
When the entire curve moves caused by
1. Discovery of new resources
2. New technowledgy
3. Economic Growth
Waht is Economic Efficiency?
The production of some combination of goods ont he PPF.
Waht is the Production Posibility Function?
It shows all possible combinations of the two goods procuced given available technowledgy.
What is a Speculator?
Some one that makes sure goods are sold without undo wate in accordance to the publics financial status.
What is a Substitute?
When the price of one goes up the demand of the other goes up.
What is a Compliment?
When the price of one goes up the demand of the other goes down.
What is an Inferior Good?
Something you buy less of when you get more money.
What is a Normal Good?
Something you buy more of when you have more money.
What is a Right Ward Shift?
Increas in demand or an increase in supply.
What is a Left Ward Shift?
Decrease in demand or a decrease in supply.
What is Economics?
The study of how individuals and society choose to use their scarce resource to satisfy unlimited wants.
What is Land?
A scarce resource that also includes the natural resources on and under the land.
What is Labor?
A scarce resource known as the time spent in productionby the unskilled, skilled, and entrepreneurs.
What is Capital?
A scarce resource: Intermediate goods/a tool or machine made to produce other goods and services which are very rouund about. They make productions more productive longer lasting tools that are not used in consumpltion.
What is an Economic Actor?
Someone who participates in markets.
Waht can happen when people misunderstand the market?
It can Breed Envy so that people blame companies and others in general for cheating to get to the top.
What is a Relative Price?
A price of one good compareed to another
What is a Nomal Good?
If your demand of that good increases when your income increases.
What is a Inferior Good?
If your demand decreases with your increase of income.
What is the Market Demand?
The horizontal sum of individual demands.
What is the Market Suply?
The horizontal sum of individual supply curve.
What is Stock?
A company/corporation that is owned in parts.
What is the Price of Stock?
Present discounted value expected future earning.
Speculators will increas...
volatitlity but they tend to equilibriate prices.
What is the Midpoint?
The unity of elasticity.