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Scarcity
a situation where everyone cant get all they want of something
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Economics
The study of how people do the best they can, or cope, in a world of scarcity
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Marginal Costs
Incremental cost, the cost of a little bit more
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Marginal Benefit
Incramental benefit, the benefit of a little bit more
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Market
A place that brings buyers and sellers together
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"Invisible Hand"
The tendency of firms and resource suppliers that seek to further their own self-interests in competitive markets to also promote the interests of society
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Demand
The relationship between price and quantity demand
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Substitutes
- Goods that can be used in place of each other. When the price of one falls, the demand for the other product falls vice versa.
- Coke and Pepsi are substitutes
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Complements
- Goods that are used together. When the price of one falls, the demand for the other product increases.
- Video games and Xboxs are complements
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Supply
The relationship between price and quantity supply
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Positive vs. Normative
- Positive- "what is"
- Normative- "what should be"
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If sellers expectations of future prices goes up, what shifts?
Supply goes down
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If the number of sellers goes up, what shifts?
Supply goes up
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Gross Domestic Product (GDP)
The dollar value of new domestically produced, final goods/services over a period of time, such as a year
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Unemployed
- Labor Force
- Not working
- Available for/looking for work
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Unemployment Rate
Unemployed people/Labor force
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Inflation
A general rise in prices over time
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Sticky Prices
Product prices that remain in place (atleast for a while) even though supply or demand has changed
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Basic determinants of demand
- Consumers tastes' (preferences)
- Number of buyers in the market
- Consumers' incomes
- Prices of related goods
- Consumer expectation
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Basic determinants of supply
- Resource prices
- Technology
- Taxes and subsidies
- Prices of other goods
- Producer expectations
- Number of sellers in the market
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Opportunity Costs
To obtain one more thing, society forgoes the opportunity of getting the next best thing. That sacrifice is opportunity cost
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Command System
A method of organizing an economy in which property resources are plublicly owned and government uses central economic planning to direct and coordinate economic activities
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Market System
Economy in which the the private decisions of consumers, resource suppliers, and firms determine how resources are allocated
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Equilibrium Price
The price at which the quantity demanded and the quantity supplied are equal, there is neither a shortage or a surplus, and there is no tendency for price to rise or fall
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Surplus
The amount by which the quantity supplied of a product exceeds the quantity demanded at a specific price
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Shortage
The amount by which the quantity demanded of a product exceeds the quantity supplied at a particular price
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Difference between real GDP and nominal GDP
- Real GDP- measures the value of final goods/services produced within the country's borders
- Nominal GDP- totals the dollar value of all goods/services produced
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Sellers Expectation shift what?
Supply
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