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43 Cards in this Set
- Front
- Back
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Efficiency |
maximum output from resources |
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Equity |
goods and services are divided fairly |
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Economic Growth |
attempt to improve living, manufacture more goods |
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Economic Freedom |
choices without government intervention |
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Economic Stability |
safety net for the future (unemployment insurance, social security) |
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factors of production |
the resources necessary to make an economic good or service |
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land |
natural resources such as oil or coal
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labor |
effort a person devotes to a good or service
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human capital |
human knowledge and skills the worker has |
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physical capital |
a man-made machine used to create goods |
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economic goods |
any tangible good that people will pay for (apple, phone, cars) |
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economic services |
something intangible that people will pay for (movies, education, security) |
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PPF Graph |
shows alternative ways to use an economy's resources in the production of two goods |
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underutilization |
not using all resources (under the curve of a PPT graph) |
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economic growth |
"shift to the right" - growth as a result of more resources |
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circular flow diagram |
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factor market |
where businesses buy the factors of production from households |
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product market |
where households purchase finished goods from businesses |
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specialization |
when firms/individuals concentrate their efforts on creating a limited number of goods/services |
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Law of Demand
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When the price of a good or service is lower, consumers will buy more of it
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Increase in Quantity Demanded
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Decrease in Quantity Demanded
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Increase in Demand
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Decrease in Demand
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Compliments
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Goods that are used together; If the price of a compliment increases, the demand decreases
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Substitutes
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Goods used in place of one another; If the price of a substitute increases, demand increases
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Change in Quantity Demanded
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Caused by a change in the price of a good
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Factors that Cause a Change in Demand
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Style/preference, population, income, compliments/substitutes , expectations (what consumers think will happen in the future)
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Elasticity of Demand
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A measure of how consumers reach to price change
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Inelastic
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Quantity demanded is not very sensitive to a change in price
ex) insulin, oil |
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Elastic
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Quantity demanded is very sensitive to a change in price
ex) pizza |
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Total Revenue Test
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TR=P(Q)
Total Revenue = Price x Quantity States that an increase in the price of an inelastic good will result in increased revenue and a decrease in price will result in less revenue States that an increase in the price of an elastic good will result in less revenue and a decrease in price will result in more revenue |
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utility
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the usefulness or satisfaction one receives from a good or service
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marginal utility
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the additional satisfaction a consumer gains from consuming one more unit of a good or service
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law of supply
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producers will offer more of a good at a high price (as price changes, quantity supplied changes)
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supply
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the amount of goods or services available |
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TING
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technology (more=increase in supply), input (if price of factors of production increases, supply decreases), number of sellers (more sellers=increase in supply), government (increase in taxes=decrease in supply)
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price ceiling
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a maximum price that can be legally charged for a good or service; can cause a shortage
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price floor
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the minimum price for a good or service; can cause a surplus
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decrease in supply
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price increases, quantity decreases
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increase in supply |
price decreases, quantity increases
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decrease in demand |
price decreases, quantity decreases
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increase in demand
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price increases, quantity decreases
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