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Econ 101 > Exam #1 > Flashcards

Exam #1 Flashcards

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1
Q

Absolute advantage

A

The ability to produce a good using fewer inputs than another producer

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2
Q

Comparative advantage

A

The ability to produce a good at a lower opportunity cost than another producer

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3
Q

Scarcity

A

The limited nature of society’s resources

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4
Q

Economics

A

The study of how society manages its scarce resources

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5
Q

Efficiency

A

The property of society getting the most it can from its scarce resources

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6
Q

Opportunity cost

A

Whatever must be given up to obtain some item

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7
Q

Rational people

A

People who systematically and purposefully do the best they can do to achieve their objectives

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8
Q

Marginal change

A

A small increment adjustment to a plan of action

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9
Q

Incentive

A

Something that induces a person to act

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10
Q

Property rights

A

The ability of an individual to own and exercise control over scarce resources

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11
Q

Externality

A

The impact of one persons actions on the well-being of a bystander

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12
Q

Market power

A

The ability of a single economic actor to have a substantial influence on market prices

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13
Q

Productivity

A

The quantity of goods and services produced from each unit of labor input

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14
Q

Inflation

A

An increase in the overall level of prices in the economy

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15
Q

Production possibilities frontier

A

A graph that shows combination of output that the economy can possibly produce given the available factors

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16
Q

Microeconomics

A

The study of how households and firms make decisions

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17
Q

Macroeconomics

A

Inflation, unemployment, economic growth

18
Q

Positive statements

A

Claims that attempt to describe the world as it is

19
Q

Normative statements

A

Claims that attempt to prescribe how the world should be

20
Q

Imports

A

Goods produced abroad and sold domestically

21
Q

Exports

A

Good produced domestically and sold abroad

22
Q

Market

A

A group of buyers and sellers of a particular good or service

23
Q

Law of demand

A

The quantity demanded of a good falls when the price of the good rises

24
Q

Demand curve

A

A graph of the relationship between the price of a good and the quantity demand

25
Q

Normal good

A

An increase in income leads to an increase in demand

26
Q

Inferior good

A

An increase in income leads to a decrease in demand

27
Q

Substitutes

A

Increase in one good = increase in demand for another

28
Q

Quantity supplied

A

The amount of a good that sellers are willing and able to sell

29
Q

Law of supply

A

The quantity supplied of a good rises when the price of the good rises

30
Q

Supply curve

A

A graph of the relationship between the price of a good and the quantity supplied

31
Q

Equilibrium

A

market price has reached the level at which quantity supplied equals quantity demanded

32
Q

Equilibrium price

A

The price that balances quantity supplied and quantity demanded

33
Q

Equilibrium quantity

A

The quantity supplied and the quantity demanded at the equilibrium price

34
Q

Surplus

A

A situation in which quantity supplied is greater then quantity demanded

35
Q

Shortage

A

A situation in which quantity demanded is greater then quantity supplied

36
Q

Law of supply and demand

A

The claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

37
Q

Elasticity

A

A measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants

38
Q

Total revenue

A

The amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold

39
Q

Tax incidence

A

The manner in which the burden of a tax is shared among participants in a market

40
Q

Price ceiling

A

A legal maximum on the price at which a good can be sold

41
Q

Price floor

A

A legal minimum on the price at which a good can be sold

Econ 101 (2 decks)

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