ECON Flashcards
What is economics?
about everyday life, about the choices
each of us makes, and how these choices affect our
neighbors, our community, our nation, and our world.
What is econ about?
Economics is the study of how individuals make choices
about how to allocate scarce resources in order to
satisfy virtually unlimited human wants and about how
individuals interact with one another.
What does scarcity imply?
Scarcity implies that every choice we make requires
us to give up something to get something else.
“opportunity cost”
The cost of what you choose is what you have to give
up to get it.
Postiove economics
Positive
economics uses the tools of economic analysis to
describe and explain economic phenomena and to
make predictions about what will happen under
particular circumstances.
Normative econ
Normative economics is the term used to describe the
use of economic analysis to guide decisions about what
should be as opposed to what is the case.
what is the central idea of microeconon?
The interaction of supply and demand in markets
what is a market?
A market is comprised of all of the buyers and sellers
of a particular good or service.
perfectly competitive
good or service being bought and sold is highly
standardized, the number of buyers and sellers is large,
What is demand depended on?
The quantity demanded of any good is the amount of
that good buyers are willing and able to purchase.
law of demand.
negative relationship between a good’s price and the
quantity demanded
What does the law of demand include?
The law of demand is a result of the cost-benefit analysis
that rational decision-makers use when deciding how
to allocate their resources.
What is one requriment of demand?
the price of the good
What is the second factor of demand?
income
inferior goods.
Goods for
which the quantity demanded falls as income rises
substitutes.
When a decline
in the price of one good causes a reduction in the
quantity demanded of another,
complements.
When a lower price for
one good causes demand for another good to increase,
we call those two goods
Changes that you expect to occur in the future may
also affect the quantity demanded.
What does the number of buyers do with market demand?
Market demand is derived by adding up the demands
of individual consumers. If there are more consumers,
then demand will increase.
Law of Supply
This positive relation between
price and quantity supplied is called the law of supply.
what are some factors that determine law of supply?
input price
how does technology determine supply?
Changes in technology can affect how businesses
operate and hence the quantity supplied.
How does selelrs determine supply?
As more sellers enter the market, the quantity supplied
will increase.
equilibrium
It is defined as a point at
which all the forces at work in a system are balanced
by other forces, resulting in a stable and unchanging
situation.
