Master Deck (Chapters 1-6) Flashcards
1
Q
What are economic resources?
A
Economic resources are basic items used in all types of production, including natural, capital, and human resources.
2
Q
What is rational behaviour?
A
Rational behaviour is making choices by logically weighing the personal benefits and costs of available actions, then selecting the most attractive option.
3
Q
What are economic problems?
A
Economic problems are having unlimited wants but limited resources with which to satisfy them.
4
Q
What are natural resources?
A
Natural resources are the resources from nature that are used in production, including land, raw materials, and natural processes.
5
Q
What are capital resources?
A
Capital resources are the processed materials, equipment, and buildings used in production, also known as capital.
6
Q
What is labour?
A
Labour is the human effort employed directly in production.
7
Q
What is entrepreneurship?
A
Entrepreneurship is the initiative, risk-taking, and innovation necessary for production.
8
Q
What is economics?
A
Economics is the study of how to distribute scare resources to make choices.
9
Q
What is microeconomics?
A
Microeconomics is the branch of economics that focuses on the behaviour of individual participants in various markets.
10
Q
What is macroeconomics?
A
Macroeconomics is the branch of economics that takes a wide-ranging view of the economy, studying the behaviour of economic sectors.
11
Q
What are economic models?
A
Economic models are generalizations about or simplifications of economic reality; also known as laws, principles, or theories.
12
Q
What are variables?
A
Variables are factors that have measurable values.
13
Q
What is the independent variable?
A
The independent variable is the variable in a causal relationship that is affect by another variable.
14
Q
What is the dependent variable?
A
The dependent variable is the variable in a casual relationship that is affect by another variable.
15
Q
What is a inverse relationship?
A
A inverse relationship is a change in the independent variable that causes a change in the opposite direction of the dependent variable.
16
Q
What is a direct relationship?
A
A direct relationship is a change in the independent variable that causes a change in the same direction of the dependent variable.
17
Q
What is ceteris paribus?
A
Ceteris paribus is the assumption that all other things remain the same.
18
Q
What is positive economics?
A
Positive economics is the study of economic facts and why the economy operates as it does.
19
Q
What is normative economics?
A
Normative economics is the study of how the economy ought to operate.
20
Q
What is utility?
A
Utility is the satisfaction gained from any action.
21
Q
What is self-interest motive?
A
The self-interest motive is the assumption that people act to max their own welfare.
22
Q
What is opportunity cost?
A
Opportunity cost is the utility that could have been gained by choosing an action’s best alternative.
23
Q
What are production possibilities schedule?
A
A production possibilities schedule is a table that shows possible output combinations.
24
Q
What is a production possibilities curve?
A
A production possibilities curve is a table that illustrates the possible output combinations for an economy.
25
What is the law of increasing opportunity costs?
The law of increasing opportunity costs is the concept that as more of one item is produced by an economy, the opportunity costs of additional units of that product rises.
26
What is economic growth?
Economic growth is an increase in an economy's total output of goods and services.
27
What is the economic system?
The economic system is the organization of an economy, which represents a country's distinct set of social customs, political institutions, and economic practices.
28
What is a traditional economy?
A traditional economy is an economic system in which economic decisions are made on the basis of custom.
29
What is the market economy?
The market economy is a economic system based on private ownership and the use of markets in economic decision-making.
30
What is the market?
The market is a set of arrangements between buyers and sellers of a certain item.
31
What are product markets?
Product markets are markets in which consumer products are traded.
32
What are resource markets?
Resource markets are markets in which economic resources are traded.
33
What is consumer sovereignty?
Consumer sovereignty is the effect of consumer needs and wants on production decisions.
34
What is a command economy?
A command economy is an economic system based on public ownership and central planning.
35
What is a modern mixed economy?
A modern mixed economy is an economic system that combines aspect of a market economy and a command economy; production decisions are made both in private markets and by government.
36
What is a traditional mixed economy?
A traditional mixed economy is a economic system in which a traditional sector co-exists with modern sectors.
37
What are emerging economics?
Emerging economics are economics that have recently exhibited high rates of economic growth and rising average incomes.
38
What is inflation?
Inflation is a rise in the general level of prices.
39
What is unemployment rate?
The unemployment rate is the percentage of a labour force that is involuntarily unemployed.
40
What is the balance of payments accounts?
The balance of payment accounts is a summary of all transactions between Canadians and foreigners that involve exchanging Canadian dollars for other currencies.
41
What is economic efficiency?
Economic efficiency is employing scare resources in a way that derives the highest benefit.
42
What is demand?
Demand is the relationship between the various possible prices of a product and the quantities of that product consumers are willing to purchase.
43
What is quantity demanded?
Quantity demanded is the amount of a product consumers are willing to purchase at each price.
44
What is the law of demand?
The law of demand states that there is an inverse relationship between a product's quantity demanded and its price.
45
What is a demand schedule?
A demand schedule is a table that shows possible combinations of prices and quantities demand of a product.
46
What is a demand curve?
A demand curve is a graph that expresses possible combinations of prices and quantities demanded of a product.
47
What is change in quantity demanded?
Change in quantity demanded is the effect of a price change on quantity demanded.
48
What are demand factors?
Demand factors are factors that can cause an increase or a decrease in a product's demand.
49
What is a increase in demand?
A increase in demand is an increase in the quantity demanded of a product at all prices.
50
What is a decrease in demand?
A decrease in demand is a decrease in the quantity demanded of a product at all prices.
51
What are normal products?
Normal products are products whose demand changes directly with income.
52
What are inferior products?
Inferior products are products whose demand changes inversely with income.
53
What are substitute products?
Substitute products are products that can be consumed in place of one another.
54
What are complementary products?
Complementary products are products that are consumed together.
55
What is supply?
Supply is a relationship between the various possible prices of a product and the quantities of the product that businesses are willing to supply.
56
What is quantity supplied?
Quantity supplied is the amount of a product businesses are willing to supply at each price.
57
What is market supply?
Market supply is the sum of all producers quantities supplied at each price.
58
Law of supply?
The law of supply states that there is a direct relationship between a product's quantity supplied and its price.
59
What is supply schedule?
A supply schedule is a table that shows possible combinations of a prices and quantities supplied of a product.
60
What is a supply curve?
A supply curve is a graph that expresses possible combinations of prices and quantities supplied of a product.
61
What is a change in quantity supplied?
A change in quantity supplied is the effect of a price change on quantity supplied.
62
What are supply factors?
Supply factors are factors that can cause an increase or decrease in a product's supply.
63
What is a increase in supply?
An increase in supply is an increase in the quantity supplied of a product at all prices.
64
What is a decrease in supply?
A decrease in quantity supplied of a product at all prices.
65
What is market equilibrium?
Market equilibrium is the stable point at which demand and supply curves intersect.
66
What is a surplus?
A surplus is an excess of quantity supplied over quantity demanded.
67
What is a shortage?
A shortage is an excess of quantity demanded over quantity supplied.
68
What is the price elasticity of demand?
The price elasticity of demand is the responsiveness of a product's quantity demanded to a change in its price.
69
What is elastic demand?
Elastic demand is the demand for which a percentage change in a product's price causes a larger percentage change in quantity demanded.
70
What is inelastic demand?
Inelastic demand is the demand for which a percentage change in a product's price causes a smaller percentage change in quantity demanded.
71
What is perfectly elastic demand?
Perfectly elastic demand is the demand for which a product's price remains constant regardless of quantity demanded.
72
What is perfectly inelastic demand?
Perfectly inelastic demand is the demand for which a product's quantity demanded remains constant regardless of price.
73
What is total revenue?
Total revenue is the total revenue earned from a product, calculated by multiplying the product's price by its quantity demanded.
74
What is unit-elastic demand?
Unit-elastic demand is demand for which a percentage change in price causes an equal change in quantity demanded.
75
What is income elasticity?
Income elasticity is the responsiveness of a product's quantity demanded to a change in average consumer income.
76
What is the cross-price elasticity?
The cross-price elasticity is the responsiveness of a product's quantity demanded to a change in the price of another product.
77
What is price elasticity of supply?
What price elasticity of supply is the responsiveness of a product's quantity supplied to a change in price.
78
What is elastic supply?
Elastic supply is the supply for which a percentage change in a product's price causes a larger percentage change in quantity supplied.
79
What is inelastic supply?
Inelastic supply is supply for which the percentage change in a product's price cases a smaller percentage change in quantity supply.
80
What is the immediate run?
The immediate run is the production period during which none of the resources required to make a product can be varied.
81
What is perfectly inelastic supply?
Perfectly inelastic supply is supply for which a product's quantity supplied remains constant regardless of price.
82
What is the short run?
The short run is the production period during which at least one of the resources required to make a product cannot be varied.
83
What is the long run?
The long run is the production period during which all resources required to make a product can be varied and businesses may either enter or leave the industry.
84
What is constant-cost industry?
A constant-cost industry is an industry that is not a major user of any single resource.
85
What is perfectly elastic supply?
A perfectly elastic supply is supply for which a product's price remains constant, regardless of quantity supplied.
86
What is increasing cost industry?
An increasing cost industry is an industry that is a major user of at least one resource.
87
What is business?
A business is an enterprise that brings individual's, financial resources, and economic resources together to produce a good or service for economic gain.
88
What is production?
Production is the process of transforming a set of resources into a good or a service that has economic value.
89
What are inputs?
Inputs are the resources used in production.
90
What are outputs?
Outputs are the quantity of a good or service that results from production.
91
What is a labour-intensive process?
A labour-intensive process is a production process that employs more labour and less capital.
92
What is a capital-intensive process?
A capital-intensive process is a production process that employs more capital and less labor.
93
What is productive efficiency?
Productive efficiency is making a given quantity of output at the lowest cost.
94
What are explicit costs?
Explicit costs are payments made by a business to businesses or people outside of it.
95
What are implicit costs?
Implicit costs are the owner's opportunity costs of being involved with a business.
96
What are normal profits?
Normal profits are the minimum return necessary for owners to keep funds and their entrepreneurial skills in their businesses.
97
What is economic costs?
Economic costs are a business's total explicit and implicit costs.
98
What is accounting profit?
Accounting profit is the excess of a business's total revenue over its explicit costs.
99
What is economic profit?
Economic profit is the excess of a business's total revenue over its economic costs.
100
What are fixed inputs?
Fixed inputs are inputs whose quantities cannot be adjusted in the short run.
101
What are variable inputs?
Variable inputs are inputs who quantities can be adjusted in the short run.
102
What is the total product?
The total product is the overall quantity of output produced with a given workforce.
103
What is the average product?
The average product is the quantity of output produced per worker.
104
What is the marginal product?
The marginal product is the extra output produced by an additional worker.
105
What is the law of diminishing marginal returns?
The law of diminishing marginal returns explains that at some point, as more units of a variable input are added to a fixed input, the marginal product will start to decrease.
106
What are fixed costs?
Fixed costs are economic costs for inputs that remain fixed at all quantities of output.
107
What are variable costs?
Variable costs are economic costs for inputs that vary at each quantity of output.
108
What is the total cost?
The total cost is the sum of all fixed and variable costs at each quantity of output.
109
What is the marginal cost?
The marginal cost is the extra cost of producing an additional unit of output.
110
What is the average fixed cost?
The average fixed cost is the fixed cost per unit of output.
111
What is the average variable cost?
The average variable cost is the variable cost per unit of output.
112
What is the average cost
The average cost is the sum of the average cost and average variable cost at each quantity of output.
113
What are increasing returns to scale?
Increasing returns to scale is a situation in which a percentage increase in all inputs causes a larger percentage increase in output.
114
What are constant returns to scale?
Constant returns to scale is a situation in which a percentage increase in all inputs results in an equal percentage increase in output.
115
What are decreasing returns to scale?
Decreasing returns to scale is a situation in which a percentage increase in all inputs causes a smaller percentage increase in output.
116
What is the long-run average cost?
The long-run average cost is the minimum short-run average cost at each possible level of output.
117
What are economies of scope?
Economics of scope are the cost advantage related to a single business producing different products.
118
What is perfect competition?
A market structure characterized by many buyers and sellers of a standard product and easy entry to and exit from the industry.
119
What is monopolistic competition?
Monopolistic competition is the market structure characterized by many buyers and sellers of slightly different products, and easy entry to and exist from the industry.
120
What is oligopoly?
A oligopoly is a market structure characterized by only a few businesses offering standard or similar products and restricted entry to the industry.
121
What is a monopoly?
A monopoly is a market structure characterized by only one business supplying a product with no close substitutes and restricted entry to the industry.
122
What are entry barriers?
Entry barriers are economic or institutional obstacles to businesses entering an industry.
123
What is a natural monopoly?
A natural monopoly is a market in which one business is economically viable because of increasing returns to scale.
124
What is predatory pricing?
Predatory pricing is a unfair business practice of temporarily lowering prices to drive out competitors in an industry.
125
What is market power?
Market power a business's ability to affect the price of the product it sells.
126
What is business's demand curve?
A business's demand curve is a demand curve faced by an individual's business, as opposed to an entire market.
127
What is average revenue?
Average revenue is a business's total revenue per unit of output.
128
What is marginal revenue?
Marginal revenue is the extra total revenue earned from an additional unit of output.
129
What is profit-maximizing output rule?
Profit-maximizing output rule: produce at the level of output where marginal revenue and marginal cost intersect.
130
What is the breakeven point?
The breakeven point is the profit maxing output where price (or average revenue), equals average cost.
131
What is the shutdown point?
The shutdown point is the level of output where price (or average revenue) equals minimum average variable cost.
132
What is business's supply curve?
A business's supply curve is a curve that shows the quantity of output supplied by a business at every possible price.
133
What is marginal-cost pricing?
Marginal-cost pricing is the practice of selling the price that consumers are willing to pay as equal to marginal cost.
134
What is marginal productivity theory?
Marginal productivity theory is the theory that businesses use resources on the basis of how much extra profit these resources provide.
135
What is marginal revenue product?
The marginal revenue product is the change in total revenue associated with employing each new unit of a resource.
136
What is the marginal resource cost?
The marginal resource cost is the extra cost of each additional unit of a resource.
137
What is business's labour demand curve?
The business's labour demand curve is a graph that shows the possible combinations of workers demanded by a business at each possible wage.
138
What is business's labour supply curve?
A business's labour supply curve is a graph showing the possible combinations of workers supplied to a business at each possible wage.
139
What is profit-maximizing employment rule?
The profit-maximizing employment rule states a business should use a resource up to the point where the resource's marginal revenue product equals its marginal resource cost.
140
What is a labour market demand curve?
The labour market demand curve is a graph showing the possible combinations of workers demanded in a certain labour market at each possible wage.
141
What is a labour market supply curve?
The labour market supply curve is a graph that shows the possible combinations of workers supply their labour in a certain labour market at each possible wage.
142
What is mutual interdependence?
Mutual interdependence is the relationship among oligopolists in which the actions of each business affect the other businesses.
143
What is market share?
Market share is a business's proportion of total market sales.
144
What is the kinked demand curve?
A kinked demand curve is a demand curve with two segments, one fairly flat and one steep, that is typical of rival oligopolists.
145
What is price leadership?
Price leadership is an understanding among oligopolists that one business will initiate all price changes in the market and the others will follow by adjusting their prices and outputs accordingly.
146
What is collusion?
Collusion is when oligopolists are acting together as if they are a monopoly.
147
What is a cartel?
A cartel is a union of oligopolists who have a formal market-sharing agreement.
148
What is average-cost pricing?
Average-cost pricing is the practice of setting price where it equals average cost.
149
What is accounting-profit rate?
Accounting-profit rate is a measure of a business's profitability calculated as its accounting profit divided by owner's equity.
150
What is fair rate of return?
A fair rate of return is the maximun accounting-profit rate allowed for a regulated monopoly.
151
What is game theory?
Game theory is an analysis of how mutally interdependent actors try to acheive their gaols through the use of strategy.
152
What is prisoner's dilemma?
Prisoner's dilemma is a classic example of how player's self interested actions can be self defeating.
153
What are contestable markets?
Contestable markets are those in which the threat of new entrants is credible.
154
What is anti-combines legislation?
Anti-combines legislation are laws aimed at preventing industrial concentration and abuses of market power.
155
What is a horizontal merger?
A honrizontal merger is a combination of former rivals.
156
What is a vertical merger?
A vertical merger is a combination of a business and its supplier.
157
What is a conglomerate merger?
A conglomerate merger is a combination of businesses in unrelated inrelated industires.
158
What is non-price competition?
Non-price competition are efforts to increase demand through product differentiation, advertising, or both.
159
What is production differentation?
Product differentation are efforts to make a product distinct from competitor's products.
160
What is the concentration ratio?
The concentration ratio is the percentage of total sales revenue earned by the largest bnusinessess in the market.
161
What is industrial concerntration?
Industrial concernation is market domination by one or a few large businesses.
