Exam 1 economics Flashcards
The study of specific components within a major economy
Microeconomics
Tangible item that people want and for which they would pay
Good
Intangible good of labour for which people intend to pay
Service
A mechanism that allows people to exchange goods
Market
What is the human desire to have or use a certain good
Want
The quantity of a good sell at a certain price under certain conditions
Supply
The amount of a good that is bought at a certain price under certain conditions
Demand
The first thing to understand about economics
Everything has to be work for
The old fashioned word “spend more than you made”
Prodigality
Anything used in the production and distribution of goods and services
Capital good
Things produced for direct use for consumers
Consumer goods
A truck is a consumer good or capital good
Depends
The worth that consumers attach to something
Value
2 things that determine the value
Scarcity and utility
Founder of the Austrian school of economics
Carl Menger
Carl Menger solved what riddle?
Water-Diamond Paradox
The belief that a nation’s wealth is based on the amount of gold and silver that it possess
Mercantilism
The difference in value of the goods that a country sells compared to those that purchases from other countries
Trade balance
Taxes that government supply on imported goods
Tariffs
The establishment of colonies and extensive territories created to benefit their mother countries
Imperialism
Who would oppose to the mercantilism and say that wealth is based upon lands
Physiocrats
“Hands off” approach to the economy
Laizess faire
Founder of modern economics
Adam Smith
What book did Adam Smith wrote
The wealth of nations (1776)
What did Adam Smith said brought the consumer and the producer together?
The invisible hand
Economic success, or the condition of enjoying many goods, including services.
Prosperity
The value of all the things that people own
Wealth
Factors of production
Labour
Natural resources
Capitalist
Robinson Crusoe was a capitalist?
Yes
Who wrote Robinson Crusoe
Daniel Dafoe
Who started the physiocrats?
Samuel Du Pont
Entrepreneurship in gunpowder
E.I. Du Pont
Components of capitalism
Free enterprise and competition in a market environment
Private property
Limited government
A song is what type of private property?
Intellectual
The relationship between a good’s price and the amount that people are willing to buy
Demand
As the relationship between a good’s price and the amount that producers are willing to provide for consumers
Supply
The 2 types of value
Value in use and value in exchange
The amount of money that a buyer pays the seller for a particular item
Price
As one’s supply of a specific good increases the satisfaction derived for each additional unit decreases
Diminishing marginal utility
The amount of satisfaction that results from a one unit increase tends to become smaller with each additional unit
Marginal utility
The total amount of satisfaction for receiving a particular good is called
Total utility
As the price of a good increases the quantity demanded decreases
Law of demand
When the price of a good falls consumers tend to buy more of that good or other items because they can do so without giving up anything
Income effect
What indicates that people tend to substitute less expensive goods for ones who’s prices has risen
Substitution effect
What is a list of numbers that compare price with quantity
Demand Schedule
Graphic representation of the quantity of goods purchased at different prices
Demand curve
Things that affect in quantity supplied
Price
A good who’s demand is directly related to consumers incomes
Normal good
Demand for what type of items decreases as what incomes increases?
Inferior goods
A good often use in conjunction with other
Complement
“Other things remaining equal, as the price of a good increases, the quantity supplied also increases in a free market economy”
Law of supply
Graphic representation of quantity supplied
Supply curve
Things that affect in change supplied
Technology
What is called when a government would give money to improve production
Subsidies
What is point in which quantity supplied and quantity demanded stay equal
Equilibrium
The availability of what is a major reason that many goods are elastic
The availability of substitute
The sharper the curve, the more what?
Inelastic
Price ceilings results in what?
Shortage
Signs that are used by consumers and producers to determine how much of a good to buy or sell at a given price and time
Market signals
Non durable goods have a last expectancy less then?
3 years
Shadowy, underground systems
Black market
The part of an economy that is controlled by private individuals, businesses, and organizations.
Private sector
The reason that a person is willing to trade certain goods wether they are tangible items, or other goods.
Profit motive
The diminishing of the value of goods that is caused by wear and time.
Depreciation
The excess of the total revenue paid by buyers for goods over the seller’s total expense of producing those goods
Profit
The value of the best alternative that is foregone when a different alternative is taken
Opportunity cost
The wage that will cost people who run their own establishments to hire managers to manage their business for them
Wage of management
Total value of a business minus any liability
Equity
A group of firms that produce similar products or provide similar services
Industries
Characteristics of the market models
How is known each firm in the market because it has no real control over the price it receives for its product- the firm takes whatever price it can get
Price takers
Can there be close substitutes in a monopoly?
No
Occurs when a single firm can fill the demand for a good more efficiently than if there were multiple firms in the industry.
Natural monopoly
Trade market is an example of what?
Legal monopoly
Example of monopolistic competition
Shampoo
Soap
American automobile manufactory is an example of what?
Oligopoli
4 leading forms must control what percent?
40%
When all firms get together is called?
Collusion
One of the first and most important antitrust laws was the…
Sherman Act
Act that outlawed several practices that were not specifically addressed in earlier laws
Clayton act
Force the consumer to buy a certain product before he can buy the product he really wants
Tying contracts
Selling the same type of goods at different prices to different buyers
Price discrimination
A governmental agency whose purpose is to investigate trade practices
Federal Trade Commission (FTC)
The quality of producing effectively with a minimum of waste
Efficiency
The total amount invested in the production of a good
Input
The total amount of a good that is produced
Output
What creates the Wealth of Nations?
Intelligent work
What makes possible a better standard of living for everyone?
Competition
The sum of all the factors of production used in making goods
Total cost
The sum cost of all the factors of production used in producing one unit of a good
Average cost
3 things that we need for mass production
Division of labor, or specialization
Standardized parts
Automatic conveyance (the assembly line)
Advantages of division of labour
Specialization
More goods produced per person
Disadvantage of division of labour
Boredom
Parts of the American system
Standardized parts
Specialization
Assembly line
When specialization it is carried beyond the maximum efficiency
Overspecialization
The ability of one entity to produce goods or provide services more efficiently than his competitors when given the same resources
Absolute advantage
The ability of an entity to produce a good
Comparative advantage
The production of goods in which a region has an absolute or a comparative advantage
Geographic specialization
Person who advocate of the principle of comparative advantage and talk about the risks of protectionism
David Ricardo
Whenever there are no restrictions or penalties placed upon the exchange of goods is called
Free trade
Taxes that must be paid on imported goods before they are allowed to enter an area
Tariffs
Why wages and salaries are not equal?
Location
Experience
Schemes to convince costumers to buy
Products o lower shelfs
If the supplies of workers decreases, the wages would?
Increase
Amount of works and goods that a worker produces in an amount of time
Productivity
What does PPC Stand for>
Production Possibility Curve
A shift outward demonstrates what?
Expanding economy
A system in which a centralized authority determines the production and distribution of goods and services as well as things like savings, investments, and prices
Command economy
A system in which people are free to make their own economic choices.
Free enterprise economy
When a system combines a good measure of free enterprise in some areas with heavy state regulation in others results on
Mixed Economy
Economic system that provides barely enough to keep a society alive
Subsistence economy
System in which the majority of a nation’s capital is owned and controlled by private individuals and businesses.
Private capitalism
