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What is scarcity?
It is the limited nature of resources
What is economics?
The study of how society manages it's scarce resources
What is efficiency?
It is the property of society getting the most it can from it's scarce resources
What is equaltiy?
it is the property of distributing economic prosperity uniformly among the members of society
What are rational people?
people who systematically and purposefully do the best they can to acheive their objectives
What are marginal changes?
Small incremental adjustments to a plan of action
What is an incentive?
something that induces a person to act
What is a market economy?
an economy that allocates resources throught the decentralized descisions of many firms and households as they interact in markets for goods and services
What are property rights?
the ability of an individual to own and exercise control over scarce resources
What is a market failure?
a situation in which a market left on its own fails to allocate resources efficiently
What is an externality?
action takes place that cause spill-over effect on non-consenting 3rd parties
What is market power?
the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices
What is productivity?
the quanitity of goods and services produced from each unit of labor input
What is inflation?
an increase in the overall level of prices in the economy
inflation rising at a rapid rate
What is a business cycle?
fluctuations in economic activity, such as employment and production
What is a Circular-flow diagram?
A visual model of the economy that shows how dollars flow through makerts among households and firms
What is production possiblities frontier?
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
What is microeconomics?
the study of how households and firm make decisions and how they interact in markets
What is macroeconomics?
the study of economy wide phenomena, including inflation, unemployment, and economic growth
What is a postive statement?
claims that attempt to describe the world as it is
What is a normative statement?
Claims that attempt to prescribe how the world should be
What is absolute advantage?
the ability to produce a good using fewer inputs than another producer
What is opportunity cost?
whatever must be given up to obtain some item
What is comparative advantage?
the ability to produce a good at lower opportunity cost than another producer
What are imports?
goods produced abroad and sold domestically
What are exports?
goods produced domestically and sold abroad
What is a market?
a group of buyers and sellers of a particular good or service
What is a competive market?
a market in which there are many buyers and many sellers so that each has a negligible impact on the market
What is quantity demanded?
the amount of a good that buyers are willing and able to purchase
What is law of demand?
claim that other things equal, when the price of a good rises, the quanitity demanded of the good falls, and when prices fall, the quanitity demanded rises
increase of price of product>decrease quantity demanded>vice versa
What is demand schedule?
a table that show the relationship b/w the price of a good and quantity demanded
What is demand curve?
a graph of the relationship b/w price of a good and the quantity demanded
What is normal good?
if the demand of the good falls when income falls
what is inferior good?
if demand for good rises when income falls
two goods for which an increase in the price of one leads to an increase in the demand for the other
what is complements?
two goods for which an increase in price of one leads to a decrease in the demand for the other
the amount of a good that sellers are willing and able to sell
law of supply
claim that, other things equal, the quanitity supplied of a good rises when the price of the good rises
a table that shows the relationship b/w the price of a good and the quantity supplied, holding constant everything else that influences how much producers of the good want to sell
curve relating price and quantity supplied
situation at which market price has reached quantity supplied equals quantity demanded
the price that balances quantity supplied and quantity demanded
the quantity supplied and the quantity demanded at the equilibrium price
a situation in which quantity supplied is greater than quantity demanded
a situation in which quantity demanded is greater than quantity supplied
law of supply and demand
claim that the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance
a measure of the responsiveness of quantity demanded or quantity supplied to one of it's determiants
price elasticity of demand
a measure of how much quantity demanded of a good responds to a change in price of that good, computed as the % change in quantity demanded divided by the % change in price
the amount paid by buyers and recieved by sellers of the good.
Factors that change Demand
- 1) prices of related products
- A)Substitute: decrease in price Canada Dry>demand decrease for B gingergale
- B)Complement: increase....
- 2)Taste and Preferences-seasonal
- increase D if advertising
- A) increase in income, increase of DBGA-normal good
- B)increase income, decrease Demand of ramen noodles-inferior good
- 4)Expected future prices
- Price decrease, Demand decrease
- 5)# Buyers (consumers)
- increase Buyers, increase demand for products
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