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Microeconomics > Exam One > Flashcards

Exam One Flashcards

1
Q

simplified representation of the real world, shows how the economy works

A

model

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2
Q

theory not opinion

A

models are based in

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3
Q

other things equal/other facts are constant, holding other relevant factors constant/equal

A

ceteris paribus

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4
Q

theories and predictions hold

A

as long as assumptions hold

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5
Q

statistical analysis

A

how assumptions are tested

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6
Q

two goods case, shows options available for production of these two goods in different quantities

A

production possibilities model

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7
Q

given things in PPF

A

resources and technology

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8
Q

why PPF is concave

A

opportunity cost is not constant

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9
Q

endpoint of PPF

A

all resources are going to one production type

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10
Q

production efficiency and allocative efficiency, there is no way to make people better without others being worse, no missed opportunities

A

economic efficiency

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11
Q

combination along PPF line that is the best

A

production efficiency

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12
Q

picking the best combination for maximum satisfaction

A

allocative efficiency

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13
Q

who has the lower opportunity cost of production, could be different for each type of good, determines what people should trade and specialize in

A

comparative advantage

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14
Q

smaller trade off

A

best use of resources

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15
Q

direct exchange of goods and services

A

barter

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16
Q

not producing everything you consume

A

not self-sufficient

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17
Q

exchanges of resources, goods, and services, do it for the benefit of both parties, voluntary exchanges

A

trade

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18
Q

overall increased production of goods and services, more consumption possible

A

mutual gains

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19
Q

more consumption possible, increased satisfaction of wants, increased variety, lower prices for consumers

A

benefits of mutual gains

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20
Q

each concentrates on the tasks they are relatively better at, based on comparative advantage

A

specialization

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21
Q

output/labor

A

labor productivity

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22
Q

relative prices of traded goods, what people really gain in trade

A

terms of trade

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23
Q

when the terms of trade are greater than the opportunity cost

A

international trade continues

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24
Q

when the terms of trade are less than the opportunity cost

A

countries just produce their own goods

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25
Q

eliminating and restricting free trade

A

everyone goes down in satisfaction

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26
Q

ability to produce a good more efficiently than others, more output of a good per worker

A

absolute advantage

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27
Q

economics with judgement, not empirical, values a person has, can have disagreement about goals, based on ethical standards or norms, not testable

A

normative economics

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28
Q

economics with factual, empirical evidence, accepted relationships between variables, neither right or wrong, one correct answer, basis of economic analysis, testable

A

positive economics

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29
Q

representation of market system, flows of money, goods, and services, how they are channeled through the economy

A

circular flow diagram

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30
Q

households in circular flow diagram

A

act as consumers but also allocate resources

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31
Q

firms in circular flow diagram

A

provide goods and services, buy resources

32
Q

price times quantity sold

A

income

33
Q

mutual gains that individuals can achieve by specializing in doing different things and trading with one another

A

gains from trade

34
Q

goods, services, labor, raw materials in circular flow diagram

A

flow of physical things

35
Q

consumer spending, income, revenue, costs in circular flow diagram

A

flow of money

36
Q

firms sell what they produce to households in circular flow diagram

A

markets for goods and services

37
Q

firms buy resources they need to produce goods and services in circular flow diagram

A

factor markets

38
Q

how the total income created in an economy is allocated between less skilled workers, highly skilled workers, and owners of land and capital

A

income distribution

39
Q

description economy

A

positive economy

40
Q

prescription economy

A

normative economy

41
Q

simple prediction of the future

A

forecast

42
Q

market that has many buyers and sellers of the same good, none can influence the price of the good

A

competitive market

43
Q

model of how a competitive market behaves

A

supply and demand model

44
Q

table showing how much of a good or service consumers will want to buy at different prices

A

demand schedule

45
Q

actual amount of a good or service consumers are willing to buy at some specific price

A

quantity demanded

46
Q

graphical representation of the demand schedule, shows relationship between quantity demanded and price

A

demand curve

47
Q

a higher price for a good or service leads people to demand a smaller quantity of that good or service

A

law of demand

48
Q

change in quantity demanded at any given price, denoted by a new demand curve

A

shift of the demand curve

49
Q

change in the quantity demanded of a good’s arising from a change in the good’s price

A

movement along the demand curve

50
Q

increase in demand

A

rightward shift, consumers demand larger quantity

51
Q

decrease in demand

A

leftward shift, consumers demand smaller quantity

52
Q

if a rise in the price of a good leads to an increase in the demand for another good

A

substitutes

53
Q

if a rise in the price of a good leads to a decrease in the demand for another good, usually consumed together

A

complements

54
Q

a good whose demand increases when consumer income rises

A

normal goods

55
Q

a good whose demand decreases when consumer income rises

A

inferior good

56
Q

relationship between quantity demanded and price for an individual consumer

A

individual demand curve

57
Q

behavior of buyers

A

demand

58
Q

what does demand show

A

quantities of goods consumers would be willing to buy at certain prices

59
Q

what stays the same for demand

A

time period, quality

60
Q

wanting to buy something is determined by your

A

willingness and ability

61
Q

what does the change in the price of a good do to demand

A

nothing

62
Q

sum of all the possible prices of an item, amount consumers would purchase at a specific price

A

quantity demanded

63
Q

what is needed in order to find the quantity demanded

A

price of the good

64
Q

shows direction of changes that are occuring

A

law of demand

65
Q

what happens when the price goes up in the law of demand

A

quantity demanded goes down

66
Q

what happens when the price goes down in the law of demand

A

quantity demanded goes up

67
Q

demand factor, influences ability to purchase goods at the same price

A

change in income

68
Q

demand factor, influences willingness to buy, can cause demand to go up or down

A

change in tastes/preferences

69
Q

demand factor, one good’s value affects another good’s value

A

change in prices of related goods

70
Q

demand factor, when the amount of people changes

A

change in the number of consumers

71
Q

demand factor, prediction about what may happen

A

change in expectations about future income and prices

72
Q

demand curve when demand goes up

A

shifts to the right

73
Q

demand curve when demand goes down

A

shifts to the left

74
Q

what is quantity demanded a function of

A

price

75
Q

what type of consumer is demand referencing to

A

households

Microeconomics (7 decks)

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