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28 Cards in this Set
- Front
- Back
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Law of demand
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more will be demanded at lower prices and less at high price
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Law of Supply
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more will be offered at high price and lower at a low price
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Price effect
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movement up and down the curve
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Shift/Change in demand/supply
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movement of the curve
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Factors that cause a change in demand
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Price, tastes, income, substitutes, compliments
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Factors that change supply
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Technology, Cost of inputs and productivity
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Define elasticity/ in elasticity of demand
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In elasticity: Gas Prices
Elasticity: cookies |
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Cost benefit analysis
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way of thinking that compares the cost of an action to its benefits
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Difference between a command economy and a market economy.
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Command: a set of officials make the decisions for the whole economy
Market: the economy (demand/supply and price system) help the people make the decisions |
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Opportunity Cost:
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Cost of the next best alternative use of money, time and resources.
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Scarcity
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Scarce resources and virtually unlimited wants
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Comparative advantage:
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Countries ability to produce a given product relatively more efficiently than another country. (they have a lower opportunity cost aka, cheaper to produce.)
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Incentive
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a purpose or meaning to get something accomplished
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Price are determined by?
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The consumers and suppliers (producers) together determine the price
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Entrepreneurship:
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Risk taking individual in search of profits (on of the four factors of productions.)
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Pillars of free enterprise (4 pillars):
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Private property: Fundamental feature of capitalism which allows individuals to own and control their possessions as they wish, includes both tangible and intangible property.
PRICE SYSTEM: using money to send signals to buyers and sellers MARKET COMPETITION: provides better products ENTREPRENEURSHIP |
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Substitutes:
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Competing products that can be used in place of one another. If price increases on one demand will go up on the other
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Complements:
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products that increase the value of other products. Price increases, demand will go down for both.
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Outsourcing:
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Sending American jobs overseas to other companies for a lower opportunity cost.
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Monopoly:
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Market structure characterized by a single producer. (form of imperfect competition.)
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Oligopoly:
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Sames as monopoly but there are numerous producers controlling the economy
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Surplus:
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quantity supplied is greater than quantity demanded
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Shortage
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Quantity supplied is less that quantity demanded at a given price
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What do governments create to stop shortages and surpluses
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Price floors and ceilings
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Fiscal Policy:
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Use of government spending and revenue collection measure to influence the economy.
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Monetary Policy:
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Mechanism that keeps a money supply durable portable divisible and in a stable value, gold standard, silver standard, and fiat money standard.
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Inflation:
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Rise in the general level of prices (to much money chasing to few goods)
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Tariff:
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Tax placed on an imported product.
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