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;
21 Cards in this Set
- Front
- Back
|
Principle 1
|
people face tradeoffs
|
|
|
Principle 2
|
The cost of something is what you give up to get it
|
|
|
Principle 3
|
Rational people think at the margin
|
|
|
Principle 4
|
People resopnd to incentives
|
|
|
Principle 5
|
Trade can make everyone better off
|
|
|
Principle 6
|
Markets are usually a good way to organize economic activity
|
|
|
Principle 7
|
Governments can sometimesimprove market outcomes
|
|
|
Positive Statement
|
Describes the world as it is
|
|
|
Normative Statement
|
More like an opinion. Expresses how the world should be. Involve a value judgement.
|
|
|
Competitive Market
|
Large enough that no individual buyer or seller has a notable impact on the market
|
|
|
Quantity Demanded
|
The amount of any good that buyers are willing and able to purchase.
|
|
|
Law of Demand
|
when price rises, then demand falls
|
|
|
Increase in Demand
|
Shifts demand curve to the right
|
|
|
Related Goods: Substitutes
|
goods that serve a similar purpose. When demand for one goes up demand for the other goes down.
|
|
|
Related Goods: Compliments
|
goods that are used together. Demand behaves the same for both
|
|
|
Shifts in the Demand Curve
|
1) Income
2) Prices of Related goods 3) Tastes 4) Expectations 5) Number of Buyers |
|
|
Income: Normal Good
|
Demand for normal good falls when income falls
|
|
|
Income: Inferior Good
|
Demand for inferior goods increases falls because they are cheaper.
|
|
|
Law of Supply
|
As price increases the amount of goods supplied by sellers also increases.
|
|
|
Shifts in the Supply Curve
|
1) Input Prices
2) Technology 3) Expectations 4) Number of sellers |
|
|
Total Revenue
|
TR = P x Q
|
