Glossary Flashcards
The study of the economy as system in which feedbacks among sectors determine national output, employment and prices.
Macroeconomics
The study of individual behavior in the context of scarcity.
Microeconomics
Goods and services are supplied both by private suppliers and government.
Mixed Economies
A formalization of theory that facilitates scientific inquiry.
Model
A logical view of how things work, and is frequently formulated on the basis of observation.
Theory
What must be sacrificed when a choice is made.
Opportunity Cost
The quantity of a good or service that buyers wish to purchase at each possible price, with all other influences on demand remaining unchanged.
Demand
The quantity of a good or service that sellers are willing to sell at each possible price, with all other influences on supply remaining unchanged.
Supply
The amount purchased at a particular price.
Quantity demanded
The amount supplied at a particular price.
Quantity supplied
Other things being equal.
Ceteris paribus
The price at which quantity demanded equals the quantity supplied.
Equilibrium price
When the quantity supplied exceeds the quantity demanded at the going price.
Excess supply
When the quantity demanded exceeds the quantity supplied at the going price.
Excess demand
Determines outcomes at prices other than the equilibrium.
Short side of the market
Graphical expression of the relationship between price and quantity demanded, with other influences remaining unchanged.
Demand curve
Graphical expression of the relationship between price and quantity supplied, with other influences remaining unchanged.
Supply curve
When a price reduction (rise) for a related product reduces (increases) the demand for a primary product, it is this type of good for the primary product.
Substitute goods
When a price reduction (rise) for a related product increases (reduces) the demand fora primary product, it is this type of good for the primary product.
Complementary goods
One whose demand falls in response to higher incomes.
Inferior good
One whose demand increases in response to higher incomes.
Normal good
It is easier to communicate if equipment is compatible, and it costs less to maintain infrastructure where the variety is less.
Network economies
Compares an initial equilibrium with a new equilibrium, where the difference is due a change in one of the other things that lie behind the demand curve or the supply curve.
Comparative static analysis
The difference between revenues and actual explicit costs incurred.
Accounting profits.