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24 Cards in this Set
- Front
- Back
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What is the equation for a line?
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Y=mx+b
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What do the variables in the equation for a line mean? (i.e. what information do they give you?)
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Y is the dependent variable. m is the slope of the line. x is the independent variable. b is the y intercept.
** For more info on graphs and lines read the appendix 1 in your text. |
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how do you find the x intercept if you are given the standard equation for a line?
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given an equation y=mx+b you set y equal to zero and solve for x. For example
y=3x-6 0=3x-6 6=3x 2=x. That means when y is zero x is 2. The intercept on the x axis is 2. |
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What is a mixed economy?
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An economy that has some component of being a laissez-faire economy and some component of government regulation. Most modern economies are mixed economies.
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What is the welfare state?
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A system where the markets direct economic activities and the government is responsible for social conditions (such as entitlement programs like government provided health care or pensions.)
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What is a market? Is there anything special about a market?
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A market is a system where buyers and sellers interact to facilitate trade. It's a pretty cool thing because a market exists in such a way that no one person, organization or government is responsible for it.
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How do producers and consumers interact?
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Through price signals. Higher prices mean that less people will want to buy. Lower prices mean that more people will want to buy.
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What is market equilibrium?
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A market equilibrium is the point where the amount sellers want to sell and buyers want to buy is equal. It means that demand is equal to production.
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What is a profit?
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Profit is the difference between total sales and total costs. For example, if it costs you $15 to make a pair of shoes, and you sell the shoes for $20 you have a profit of $5.
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What is the driving force behind changes in how goods are produced?
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Market competition. The text puts it like this: "The best way for producers to meet price competition...is by adopting the most efficient methods of production." (27)
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Who was Adam Smith and what was his great insight?
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Adam Smith was an early economist. He wrote the tome now called The Wealth of Nations in 1776.
He realized that a market in perfect competition will be efficient. Price signals will work perfectly like an invisible hand to guide the relationship between buyers and sellers.When there are market failures that efficiency is lost and the "invisible hand" isn't necessarily guiding anything. |
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What is specialization?
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The focus of efforts on completing a specific task or producing a specific good. For example, Honda makes engines. They specialize in combustion engines.
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What is division of labor?
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Division of labor is when one big task is broken down into several smaller tasks.
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What is globalization?
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Globalization is the popular term for the integration of economies across national borders.
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What is money?
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Money is a medium of exchange
(it is also used as a store of value and a unit of measure). |
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What is a trait of an advanced economy?
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That the economy engages in specialization and division of labor. (32)
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What is required in order to grow an economy?
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Giving up consumption now in order to invest in capital for the future. (34)
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What is subsidizing?
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To partially pay the costs of an activity.
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What are the three main economic functions of a government?
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1. To increase efficiency by promoting competition and limiting externalities.
2.To promote equity through redistribution. 3. To manage macroeconomic problems like inflation and unemployment through fiscal policy and monetary regulation. |
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What is perfect competition?
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Perfect competition is when no entity in a market is so big or powerful that they can singly effect supply or demand (and thus the market price).
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What is imperfect competition?
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This happens when a buyer or seller can affect a good's price.
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What is an externality?
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Externalities occur when firms or people impose costs or benefits on others outside of the market.
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What is a public good?
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A good which can be enjoyed by everyone and from which no one can be excluded. They are nonrival and nonexcludable. DON'T BE FOOLED: Just because they're called public goods does NOT mean they are publicly provided (the standard example here are lighthouses, which aren't necessarily run by the government but could be used by anyone who cared to look for their light and pay attention to them).
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What can we say about equity?
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That an efficient market does not necessarily produce an equitable outcome for the people in the economy. Sometimes the government needs to step in and ensure that basic human needs are met. (39-40)
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