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33 Cards in this Set
- Front
- Back
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The study of how people allocate their limited resources to satisfy their unlimited wants.
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Economics
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The part of economic analysis that studies the behavior of the economy as a whole
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Macroeconomics
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The part of economic analysis that studies decision making under taken by individuals and by firms
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Microeconomics
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opportunity cost
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what must be given to obtain something else
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incremental adjustments to an existing plan
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marginal changes
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something that induces a person to act i.e. the prospect of a reward or punishment
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Incentive
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A group of buyers and sellers
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Market
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An individual should take action if and only if the extra benefits from taking the action are at least as great as the extra costs
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Cost-Benefit Principle
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The maximum amount the buyer will pay for a good
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Willingness to Pay
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The graph of the relationship between the price of a good and the quantity demanded
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Demand Curve
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A table representation of a demand curve
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market demand schedule
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Dependent variable; variables whose value depends on the value of other variables
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Endogenous Variable
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Independent variable; variables whose values are determined outside of the system
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Exogenous Variable
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A good that can be consumed in place of another good
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substitue good
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a good that is consumed with another good
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complement good
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What shifts the Demand/Supply curve?
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#Buyers, Income, $ofRelatedGood, Tastes, Expectations
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The graph of the relationship between the price of a good and the quantity supplied
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Supply Curve
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The minimum price that a producer is willing to accept for one unit when exchanging goods or services
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Seller's Reservation Price
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Lists the quantities supplied at each price when all other influences on a producer's planned sales remain the same
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Supply Schedule
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The claim that the quantity supplied of a good rises when the price of the good rises, other things equal
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Law of Supply
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When quantity demanded in an economy is greater than quantity
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shortage
(Qd-Qs) |
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The legal maximum price which a good can be sold
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Price Ceiling
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A situation in which quantity supplied exceeds the quantity demanded
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Surplus
(Qs-Qd) |
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The legal minimum price which a good can be sold
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Price Floor
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a graph that shows all combinations of goods and services that can be produced given the resources of society and the existing state of technology
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Production Possibilities Frontier
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Given limited resources, having more of one good thing generally means having less of another
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Scarcity Principal
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The ability to produce a good at a lower opportunity cost than another producer
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Comparative Advantage
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The division of productive activities among persons and regions so that no one individual or one area is totally self-sufficient
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Specialization
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Specialization and free trade will benefit all trading partners, even those that may be absolutely more efficient producers
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Ricardo's Theory of Comparative Advantage
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The ability to produce a good using fewer inputs than another producer
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Absolute Advantage
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how the burden of a tax is shared among market participants
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The incidence of a tax
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The fall in total surplus that results form a market distortion, such as a tax
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Deadweight Loss (DWL)
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Curve that shows the relationship between the size of the tax and tax revenue
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Laffer Curve
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