Econ definitions 1

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mapworkman
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Econ definitions 1
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2013-01-21 22:13:58
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  1. Microeconomics
    Branch of economics that deals with the behavior of individual economic units-consumers, firm, workers, and investors- as well as the markets that these units comprise
  2. Macroeconomics
    Branch of economics that deals with aggregate economic variable, such as the level and growth rate of national output, intreset rates, unemployment, and inflation
  3. Positive analysis
    analysis describing relationships of cause and effect
  4. Normative Analysis
    Analysis examining questions of what ought to be
  5. Market
    Collection of buyers and sellers that, through their actual or potential interactions, determine the price of a product or set of products
  6. Market definition
    Determination of the buyers, sellers, and range of products that should be included in a particular market
  7. Arbitrage
    Practice of buying at a low price at one location and selling at a higher price in another
  8. Perfectly Competitive market
    Market with many buyers and sellers, so that no single buyer and sellers has a significant impact on price
  9. Market price
    price prevailing in a competitive market
  10. extent of a market
    Boundaries of a market, both geographical and in terms of range of products produced and sold within it.
  11. Nominal price
    Absolute price of a good, unadjusted for inflation.
  12. Real price
    Price of a good relative to an aggregate measure of prices; price adjusted for inflation.
  13. Consumer price index
    Measure of the aggregate price level.
  14. Producer Price index
    Measure of the aggregate price level for intermediate products and wholesale goods.
  15. Supply Curve
    Relationship between the quantity of a good that producers are willing to sell and the price of the good.
  16. Demand Curve
    Relationship between the quantity of a good that consumers are willing to buy and the price of the good.
  17. Substitutes
    Two goods for which an increase in price of one leads to an increase  in the quantity demanded of the other.
  18. Complements
    Two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the other
  19. equilibrium(or market clearing) price
    Price that equates the quantity supplied to the quantity demanded.
  20. Market mechanism
    Tendency in a free market for price to change until the market clears.
  21. Surplus
    Situation in which the quantity supplied exceeds the quantity demanded
  22. Shortage
    Situation in which the quantity demanded exceeds the quantity supplied
  23. Elasticity
    Percentage change in one variable resulting from a 1-percent increase in another.
  24. Price elasticity of demand
    Percentage change in quantity demanded of a good resulting from a 1-percent increase in its price
  25. Infinitely elastic demand
    Principle that consumers will buy as much of a good as they can get at a single price, but for any higher price the quantity demanded drops to zero, while for any lower price the quantity demanded increases without limit.
  26. Completely inelastic demand
    Principle that consumers will buy a fixed quantity of a good regardless of its price
  27. income elasticity of demand
    Percentage change in the quantity of demanded resulting from a 1-percent increase in income.
  28. Cross-price elasticity of demand
    Percentage change in the quantity demanded of one good resulting from a 1-percent increase in the price of another.
  29. Price elasticity of supply
    Percentage change in quantity supplied resulting from 1-percent increase in price
  30. Point elasticity of demand
    Price elasticity at a particular point on the demand curve.
  31. arc elasticity of demand
    Price elasticity calculated over a range of prices.
  32. Cyclical industries 
    Industries in which sales tend o magnify cyclical changes in the gross domestic product and national income
  33. Theory of consumer behavior
    Description of how consumers allocate incomes among different goods and services to maximize their well-being.
  34. Market Basket (or Bundle)
    List with specific quantities of one or more goods.
  35. indfference curve
    Curve representing all combinations of market baskets that provide a consumer with same level of sanctification.
  36. Indifference map
    Graph containing a set of indifference curves showing the market baskets among which consumer is indifferent
  37. marginal rate of subsitution (MRS)
    Maximum amount of a good that consumer is willing to give up in order to obtain one additional unit of another good.
  38. perfect subsitutes
    Two goods for which the marginal rate of substitution of one for the other is constant
  39. perfect completments
    Two goods for which the MRS is zero or infinite; the indifference curves are shaped as right angles.
  40. bad
    good for which less is preferred rather than more
  41. Utility
    Numerical score representing the satisfaction that a consumer gets from a given market basket.
  42. Utility function
    Formula that assigns a level of utility to individual market baskets.
  43. Ordinal utility function
    Utility function that generates a ranking of market baskets in order of most to lease preferred
  44. Cardinal utility function
    Utility function describing by how much one market basket is preferred to another
  45. Budget constraints
    Constraints that consumers face as a result of limited incomes.
  46. Budget line
    All combinations of goods for which the total amount of money spent is equal to income.
  47. Marginal benefit
    Benefit from the consumption of one additional unit of a good
  48. Marginal cost
    Cost of one additional unit of a good
  49. Corner Solution
    Situation in which the marginal rate of substitution of one good for another in a chose market basket is not equal to the slope of the budget line.
  50. Marginal Utility (MU)
    Additional satisfaction obtained from consuming one additional unit of a good.
  51. Diminishing marginal utility
    Principle that as more of a good is consumed  the consumption of additional amounts will yield smaller additions to utility.
  52. Cost-of-living index
    Ratio of the present cost of a typical bundle of consumer goods and services compared with the cost during a base period.
  53. Ideal cost-of-living index
    Cost of attaining a given level of utility at current prices relative to the cost of attaining the same utility at base-year prices.
  54. Laspeyres price index
    Amount of money at current year prices that an individual requires to purchase a bundle of goods and services chosen in a base year divided by the cost of purchasing the same bundle at base-year prices
  55. Paache index
    Amount of money at current-year prices that an individual requires to purchase a current bundle of goods and services divided by the cost of purchasing the same bundle in a base year.
  56. fixed-weight index
    Cost-of-living index in which the quantities of goods and services remain unchanged.
  57. Chain-weighted price index
    Cost-of-living index that accounts for changes in quantities of goods and services

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