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49 Cards in this Set
- Front
- Back
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opportunity cost |
the most desired goods and services that are forgone in order to obtain something else.
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production possibilities |
combos of goods and services that could be produced in a given time period with all of the available technology |
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investment |
expenditures on capital |
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factors of production |
resource inputs used to produce goods and services |
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market failure |
an imperfection in the market mechanism that prevents optimal outcomes |
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Gross domestic product |
the total value of the final goods and services produced within a nations borders in a given time period |
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nominal GDP |
the total value of goods and services produced within a nations borders measured in current prices. |
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real GDP |
the inflations adjusted value of GDP |
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per capita GDP |
Total GDP divided by total population |
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externalty |
how a market impacts things outside of the market (like the environment |
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quintile |
One fifth |
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progressive tax |
a tax system in which tax rates rise as incomes rise |
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factor market |
any place were factors of production are bought and sold |
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product market |
any place where finished goods and services are bought and sold |
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supply |
the ability and willingness to sell specific quantities of a good at alternative prices in a given time period |
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demand |
the ability and willingness to buy stuff at alternative prices in a given time period |
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demand schedule |
a table showing how much of a good a consumer is able to buy in a given time period |
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demand curve |
a curve that describes how much of a good a consumer wants to and can buy at different prices in a given period. |
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law of demand |
the quantity of a good demanded in a given time period increases as the price falls |
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ceteris paribus |
the assumption that nothing else changes |
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market demand |
the sum of individual demands |
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market supply |
the total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period |
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law of supply |
the quantity of a good supplied in a given time period increases as the price increases |
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equilibrium price |
price where quantity demanded equals quantity supplied |
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market shortage |
excess demand |
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market surplus |
excess supply |
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price ceiling |
upper limit imposed on the price of a good or service |
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price floor |
lower limit imposed on the price of a good or service |
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government failure |
government invention that fails to improve economic conditions |
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market mechanism |
the use of market prices and sales to signal desired outputs |
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utility |
the pleasure or satisfaction obtained from a good or service |
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marginal utility |
the satisfaction obtained by consuming one additional unit of good or service |
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law of diminishing marginal utility |
the marginal utility of a good declines as more of it is consumed in a given time period |
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price elasticity of demand |
Delta Q/ Delta P |
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total revenue |
the price of a product multiplied by the quantity sold |
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factors of production |
resource inputs used to produce goods and services |
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production function |
a technological relationship expressing the maximum quantity of a good attainable from different combinations of factor inputs |
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marginal physical product |
the change in total output associated with one additional unit of input |
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law of diminishing returns |
the marginal physical product of a variable input declines as more of it is employed with a given quantity of other fixed inputs |
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short run |
the period in which the quantity and quality of some inputs cannot be changed |
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long run |
a period of time long enough for all inputs to be varied |
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profit |
the difference between total revenue and total cost |
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total cost |
the market value of all resources used to produce a good or service |
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fixed costs |
costs of production that do not change |
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variable costs |
costs of production that change when the output changes |
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average total cost |
total cost divided by stuff produced |
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marginal cost |
the increase in total costs associated with one unit increase in production |
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production decision |
the selection of the short run rate of output |
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investment decision |
the decision to enter or exit an industry |
