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61 Cards in this Set
- Front
- Back
Globalization
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the increasing integration of economies, cultures, and institutions across the world
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law of one price
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the wages of workers in one country will not differ significantly from the wages of equal workers in another institutionally similar country
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production possibility table
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a table that lists a choice's opportunity costs by summarizing what alternative outputs you can achieve with your inputs.
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PPC (production possibility curve)
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a curve measuring the maximum combination of outputs that can be obtained from a given number of inputs.
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comparative advantage
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the ability to be better suited to the production of one good than to the production of another good.
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productive efficiency
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achieving as much output as possible from a given amount of inputs or resources.
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principle of increasing marginal opportunity cost
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"in order to get more of something, one must give up ever-increasing quantities of something else"
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institutions
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the formal and informal rules that constrain human economic behavior
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market economy
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an economic system based on private property and the market in which, in principle, individuals decide how, what and for whom to produce
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private property rights
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the control a private individual or firm has over an asset.
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socialism
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an economic system based on individuals goodwill toward others, not on their own self intrest and in which, in principle, society decides what how and for whom to produce
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capitalism
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an economic system based on the market in which the ownership of the means of production resides with a small group of individuals called capitalists
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feudalism
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an eco. system in which traditions rule
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mercantilism
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an eco system in which govt determines the what how for whom decisions by doling out the rights to undertake certain economic activities
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Industrial Revolution
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a time when technology and machines rapidly modernized industrial production and mass produced goods replaced handmade goods
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entrepreneurship
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the ability to organize and get something done
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consumer sovereignty
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the consumer wishes determine whats produced
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sole proprietorships
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businesses that have ony one owner (easiest to start and have the fewest bureaucratic hassles)
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partnerships
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business with 2 or more owners (create possibilites for sharing the burden, but they also create unlimited liability for each of the partners)
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corporations
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businesses that are treated as a person, and are legally owned by their stockholders, who are not liable for the actions of the corporate "person". (the largest form of business when measured in terms of receipts. In corps, ownership is separated form control of the firm.
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stock
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certificates of ownership in a company
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limited liability
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the stockholders liability is limited to the amount the stockholder has invested in the company.
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households
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groups of individuals living together and making joint decisions
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monopoly power
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the ability of individuals or firms currently in business to prevent other individuals or firms from entering the same kind of business
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externality
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the effect of a decision on a 3rd party not taken into account by the decision maker
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macroeconomics externalities
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externalities that affect the levels of unemployment, inflation or growth in the economy as a whole
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private good
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a good that when consumed by one individual cannot be consumed by another individual
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merit good or activities
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goods and activities that government believes are good fr you even though you may not choose to engage in the activities or to consume the goods
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market failures
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situations in which the market does not lead to a desired result
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government failures
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situations in which the government intervenes and makes things worse
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global corporations
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corporations with substantial operations on both the production and sales sides in more than one country
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law of demand
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quantity demanded rises as prices falls, other things constant
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demand curve
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the graphic representation of the relationship between price and quantity demanded
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demand
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refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other things constant
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quantity demanded
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a specific amount htat will be demanded per unit of time at a specific price, other things constant
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movement along a demand curve
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the graphical representation of the effect of a change in price on the quantity demanded.
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shift in demand
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the graphical representation of the effect of anything other than price on demand
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Shift factors of demand
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1. Society's Income
2. The prices of other goods 3. Tastes 4. Expectations. 5. Taxes on and subsides to consumers. |
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market demand curve
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the horizontal sum of all individual demand curve
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law of supply
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quantity supplied rises as price rises, other things constant
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supply curve
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the graphical representation of a relationship between price and quantity supplied
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supply
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refers to a schedule of quantities a seller is willing to sell per unit at various prices, other things constant
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quantity supplied
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refers to a specific amount that will be supplied at a specific price
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movement along a supply curve
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the graphical representation of the effect of a change in price in the quantity supplied
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shift in supply
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the graphical representation of the effect of a change in a factor other than price
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market supply curve
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the horizontal sum of all individual supply curves
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equilibrium
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a concept in which opposing dynamic forces cancel each other out
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equalibrium quantity
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is the amount bought and sold at the equilibrium price
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equilibrium price
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the price toward which the invisible hand drives the market
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excess supply
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quantity supplied is greater than quantity demanded
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excess demand
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quantity demanded is greater than quantity supplied
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fallacy of composition
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the false assumption that what is true for a part will also be true for the whole.
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exchange rates
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the price of one countries currency in terms of anothers currency
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euro
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the currency used by 16 members of the EU
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price ceiling
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a government imposed limit on how high a price can be charged
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rent control
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a price ceiling on rents set by the government
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price floors
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government imposed limits on how low a price can be charged
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minimum wage laws
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laws specifying the lowest wage of firm can legally pay an employee
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excise tax
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a tax that is levied on a specific good
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tarriff
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an excise tax on an imported good.
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party-payer markets
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the person who receives the good differs from the person paying for the good.
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