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Economics 190 > Chapter 1-5 > Flashcards

Chapter 1-5 Flashcards

1
Q

Scarcity

A

The condition that arises because wants exceed the ability of resources to satisfy them

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2
Q

Microeconomics

A

The study of the choices individuals and businesses make and the way these choices interact and are influenced by governments

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3
Q

Macroeconomics

A

The study of the aggregate (total) effects on the national economy and the global economy of the choices that individuals, businesses and governments make

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4
Q

Self interest

A

The choices that are best for the individual who makes them

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5
Q

Social interest

A

The choices that are best for a society as a whole

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6
Q

Tradeoff

A

an exchange-giving up one thing to get something else

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7
Q

Rational Choice

A

a choice that uses the available resources to best achieve the objective of the person making the choice

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8
Q

Benefit

A

The benefit of something is the gain or pleasure that it brings

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9
Q

Opportunity Cost

A

The opportunity cost of something is the best thing you must give up to get it

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10
Q

Margin

A

A choice made on the margin is a choice that is made by comparing all the relevant alternatives systematically and incrementally

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11
Q

Marginal cost

A

The opportunity cost that arises from a one unit increase in an activity. The marginal cost of something is what you must give up to get one additional unit of it

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12
Q

Marginal benefit

A

The benefit that arises from a one unit increase in an activity. The marginal benefit of something is measured by what you are willing to give up to get one additional unit or it

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13
Q

Incentive

A

A reward or a penalty that encourages or discourages an action

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14
Q

Correlation

A

The tendency for the values of two variables to move together in a predictable and related way

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15
Q

Ceteris Paribus

A

other things remaining the same

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16
Q

Factors of Production

A

Land, Labor, Capital, and Entrepreneurship

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17
Q

Land

A

the gifts of nature or natural resources that we use to produce goods and services

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18
Q

Labor

A

The work time and work effort that people devote to producing goods and services

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19
Q

Human captial

A

The knowledge and skill that people obtain from education, on the job training, and work experience

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20
Q

Capital

A

Tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services

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21
Q

Entrepreneurship

A

the human resource that organizes labor, land, and capital to produce g&s

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22
Q

rent

A

income paid for the use of land

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23
Q

wages

A

income paid for the services of labor

24
Q

Interest

A

income paid for the use of capital

25
profit/loss
income earned by an entrepreneur for running a business
26
Advanced, Emerging and developing economies
Advanced- 1 billion people Emerging- 500 million Developing- 5 billion
27
Circular flow model
Model of the economy that shows the circular flow of expenditures and incomes that result from decision makers choices and the way those choices interact to determine what, how, and for whom goods and services are produced
28
Households
Individuals or groups of people living together
29
Firms
The institutions that organize the production of goods and services
30
Market
Any arrangement that brings buyers and sellers together and enables them to get information and do buisness with eachother
31
Goods market
Markets in which goods and services are bought and sold
32
Factor markets
markets in which the services of factors of production are bought and sold
33
Production efficiency
a situation in which the economy is getting all that it can from its resources and cannot produce more of one good without producing less of something else
34
absolute advantage
when one person or nation is more productive than another, needs fewer inputs or takes less time to produce a good or perform a production task
35
Comparative advantage
the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than anyone else
36
Quantity demanded
the amount of any good, service, or resource, that people are willing and able to buy during a specified period at a specified price
37
Demand
the relationship between the quantity demanded and the price of a good when all other influences on buying plans remain the same
38
Demand schedule
a list of the quantities demanded at each different price when all the other influences on buying plans remain the same
39
demand curve
a graph of the relationship between the quantity demanded and its price when all other influences on buying plans remain the same
40
Market demand
the sum of the demands of all the buyers in the market
41
Change in demand
a change in the quantity that people plan to buy when any influence other than the price changes: prices of related goods, expected future prices, income, expected future income, number of buyers, preferences
42
substitute
a good that con be consumed in place of another good. If price of a substitute increases, demand for that good rises
43
Complement
a good that is consumed with another good: the demand for a good decreases if a price of its compliment rises
44
Normal good
a good for which demand increases when income increases and demand decreases when income decreases
45
Inferior good
a good for which demand decreases when income increases and demand decreases when income decreases
46
Law of demand
Other things remaining the same, if the price of a good rises, the quantity demanded of that good decreases; and if the price of a good falls, the quantity demanded of that good increases
47
Quantity supplied
The amount of any good, service, or resource that people are willing and able to sell during a specified period at a specified price
48
Law of supply
Other things remaining the same, if the price of a good rises, the quantity supplied of that good increases; and if the price of a good falls, the quantity supplied of that good decreases
49
Substitute in production
a good that can be produced in place of another good. The supple of a good decreases if the price of one of its substitutes in production rises
50
Complement in production
a good that is produced along with another good. The supply of a good increases if the price of one of its compliments in production rises
51
Midpoint Method
Percentage change in price= (new price-initial price)/ (new price+initial price)/2
52
elastic demand
when the percentage change in quantity demanded exceeds the percentage chance in price
53
unit elastic
when the percentage change in the quantity demanded equals the percentage change in price
54
Inelastic demand
when the percentage chance in quantity demanded equals the percentage chance in price
55
Price elasticity of demand
elastic: greater than 1 unit elastic: equals 1 inelastic: less than one PEOD= % change in QD/ % change in price

Economics 190 (4 decks)

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