CMA 1.1

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Anonymous
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4590
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CMA 1.1
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2010-01-20 14:13:47
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CMA
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Cards for CMA review
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  1. Def. of Economics
    A social science that addresses the allocation of scarce resources among competing uses.
  2. Law of scarcity
    human wants are unlimited but the resources available to satisfy those wants are limited

    • Economics is based on this law.
  3. Microeconomics
    Def?
    Focus?
    Study of individual economic units in the economy. The focus is on:

    1) The Consumer -- buyer of finished goods and services and the seller of labor, entrepreneurial services and capital.

    2) The Firm -- seller of finished goods and services and the buyer of labor, entrepreneurial services and capital.
  4. Macroeconomics
    Study of economic aggregates and overview of the economy including

    1) levels of national income, employment, and prices.

    2) effects of monetary and fiscal policies.
  5. The market and underlying forces
    The coming together of those who want to buy goods and services and those who want to sell them

    • underlying forces = demand and supply

    Most fundamental concept in economics
  6. Demand
    Demand is a schedule of the amounts of a good and service that consumers are willing and able to purchase at various prices during a period of time, holding all determinants of demand constant.
  7. Quantity demanded
    The amount that will be purchased at a specific price during a period of time, holding all other determinants of demand constant.
  8. Graphical depiction of a demand schedule
    Relationship b/t the prices of a commodity (on the vertical axis) and the quantity demanded at the various prices (on the horizontal axis), holding other determinants of demand constant.
  9. The law of demand
    If all other factors are held constant (ceteris paribus), the price of a product and the quantity demanded are inversely related, i.e. the higher the price, the lower the quantity demanded.
  10. 2 drivers of the law of demand
    1) Income effect

    2) Substitution effect
  11. Income effect
    As the price of a good falls, consumers have more buying power (also called real income). As a result they can buy more of a good with the same amount of money.
  12. Substitution effect
    As the price of on good falls

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