Microeconomics Flashcards
Market with many buyers and sellers, so that no single
buyer or seller has a significant impact on price.
perfectly competitive market
Collection of buyers and sellers
that, through their actual or potential
interactions, determine the price of a product
or set of products.
market
also face limits in terms of the kinds of products that
they can produce, and the resources available to produce
them.
Firms
The social science which deals with the
production, distribution, and consumption of
limited goods and services to satisfy unlimited
needs and wants.
Economics
Qd = Qd(P)
Demand Curve
limitations–limited goods or services,
limited time, or limited abilities to
achieve the desired ends.
Scarcity
Percentage change in
quantity demanded of a good resulting from a 1-
percent increase in its price.
price elasticity of demand
The study of how society manages its scarce
resources.
Economics
Analysis examining questions of
what ought to be.
normative analysis
Two goods for which an increase in
the price of one leads to a decrease in the quantity
demanded of the other.
Complements
society has limited resources and
therefore cannot produce all the goods
and services people wish to have.
Scarcity
Branch of economics that deals with
the behavior of individual economic units—consumers,
firms, workers, and investors—as well as the markets that
these units comprise.
Microeconomics
Boundaries of a market, both
geographical and in terms of range of products
produced and sold within it.
extent of a market
Branch of economics that deals with
aggregate economic variables, such as the level and
growth rate of national output, interest rates,
unemployment, and inflation.
Macroeconomics
Percentage change in one variable
resulting from a 1-percent increase in another.
elasticity
Tendency in a free market for price to
change until the market clears.
market mechanism
Qs = Qs(P)
Supply Curve
Demand curve that is a straight line.
Linear demand curve
Relationship between the quantity of
a good that producers are willing to sell and the price
of the good.
Supply Curve
Two goods for which an increase in the
price of one leads to an increase in the quantity
demanded of the other.
Substitutes
the idea that resources (such as time, money,
land, labor, capital, entrepreneurship, and
natural resources) are only available in limited
quantities, whereas wants are unlimited.
Scarcity
Determination of the
buyers, sellers, and range of products that
should be included in a particular market.
market definition
Relationship between the
quantity of a good that consumers are willing to
buy and the price of the good
Demand Curve
Situation in which the quantity demanded
exceeds the quantity supplied.
shortage
Situation in which the quantity supplied exceeds
the quantity demanded.
surplus
Price that equates the quantity supplied to the
quantity demanded.
equilibrium (or market clearing) price
also face constraints and make trade-offs. First,
people must decide whether and when to enter the
workforce. Second, workers face trade-offs in their choice of
employment. Finally, workers must sometimes decide how
many hours per week they wish to work, thereby trading off
labor for leisure.
Workers
Price prevailing in a competitive market.
market price
have limited incomes, which can be spent on a
wide variety of goods and services, or saved for the future.
Consumers
Practice of buying at a low price
at one location and selling at a higher price in
another.
arbitrage
Analysis describing relationships of
cause and effect.
positive analysis
