Macro Exam 1 Flashcards
Determinants of Supply
- Number of suppliers
- Price of related commodities
- Expectations
- Cost of resources
- Taxes and Subsidies
- Technology
Allocative Efficiency
The mix of goods and services is just what society desires
Prices too low
Shortage
Complement Goods
typically consumed together;
when the price of one product decreases, the demand for the other good increases (and vice versa)
Determinants of Demand
(held constant in demand curve)
- Number of buyers
- Price of related goods
- Expectations
4.Taste/preferences - Income
Increase
Right shift
Absolute Advantage
- can produce more of a good
- requires a smaller quantity of inputs
- higher productivity
Normative Question
Addresses societies beliefs about what should or should not take place
Opportunity Cost
a cost of a good in terms of another that must be given up
Law of Demand: price decreases…
quantity demanded rises
Scarcity
Unlimited wants exceed limited resources
Economics
About peoples decisions regarding the use of scarce resources
Marginal Cost
The extra cost associated with undertaking action
Law of Demand: price increases…
quantity demanded falls
Production Efficiency
Being able to produce goods and services at the lowest cost possible
Normal Goods
Have more money, buy more goods
More producers enter the market…
Supply increases
Positive Question
Can be answered by available information or facts
Technology
supply increases when improvements in technology lower the cost of production
Prices too high
Surplus
When taxes are more expensive
People produce less
Market Equilibrium
occurs when quantity supplied equals quantity demanded
Decrease
Left shift
Comparative Advantage
- smaller opportunity cost
- sacrifices the quantity of one good to produce another
Inferior Goods
Have more money, buy less goods
Macroeconomics
the study of broader issues in economy, such as inflation, unemployment, and national output
PPF
A model that shows the combinations of two goods a society can produce with the right resources and technology
Efficiency
How well resources are being used and allocated
