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15 Cards in this Set
- Front
- Back
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what is the Law of Demand?
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the rule that, 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
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comparative advantage
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the abilitty of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors
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absolute advantage
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the 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
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opportunity cost
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the highest-valued alternative that must be given up to engage in an activity
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inferior good
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a good for which the demand increases as income falls
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normal good
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a good for which the demand increases as income increases
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complements
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goods and services that are used together
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subsitutes
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goods and services that can be used for the same purpose
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Which of the following statements best describes resources in the short run?
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Some resources are fixed, and some resources are variable.
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explicit vs implicit costs
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monetary vs nonmonetary
Ex: forgone wages are implicit |
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economic profit =....
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Profit =
Revenue - (Explicit + Implicit) |
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marginal product of labor
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the additional output a firm produces as a result of hiring on more worker..
Ex: 3 workers make 14 sandwhiches each; 4 workers make 10 sandwiches each MPL= 10 |
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To find total output with marginal product of labor calculate...
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first worker and their MPL, then second worker = (their MPL PLUS first workers MPL)
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law of supply
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The law of supply states that, other things equal, as the price of a good rises, the quantity supplied rises as well.
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consumer surplus
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measures the difference between what consumers are willing to pay and what they actually have to pay
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