4 Flashcards
What is the responsiveness of supply to a change in price?
%change in QD / %change in P
What is the system of resource allocation based on the free market?
Movement of prices, determined by the demand and supply curves.
What is the cost/benefit to the individual participating in economic activity?
The individual cost/benefit.
What are goods that are rivalry and excludable?
Goods that can be used by one person and are not available to others.
What is the difference between the price the producer is willing to charge and the price they actually charge?
Producer surplus.
What are goods that are non-excludable and non-rivalry?
Public goods.
What is decision-making that leads to economic agents maximizing their utility?
Rational choice theory.
What are laws to address market failure and promote competition between firms?
Antitrust laws.
What does it mean when PED/PES > 1?
Demand/supply is relatively responsive to a change in price.
What does it mean when PED/PES < 1?
Demand/supply is relatively unresponsive to a change in price.
What are renewable resources?
Resources which can be replenished over time.
What is scarcity?
The shortage of resources in relation to the quantity of human wants.
What is social cost/benefit?
The cost/benefit to society as a whole due to economic activity.
What is the social optimum position?
Where social costs equal social benefits.
What is social science?
The study of societies and human behavior.
What is specialization?
The production of a limited range of goods by a company/country/individual.
What is a specific tax?
A tax imposed on a good where the value of the tax depends on the quantity bought.
