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eco105 > midterm > Flashcards

midterm Flashcards

1
Q

scarcity

A

the problem that arises from our limited money, time, and energy

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2
Q

economics

A

how individuals, businesses, and governments make the best possible choices to get what they want, and how those choices interact in markets

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3
Q

opportunity cost

A

the cost of the best alternative given up

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4
Q

incentives

A

rewards and penalties for choices

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5
Q

production possibilities frontier

A

maximum cominations of products or services that can be produced with existing inputs

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6
Q

absolute advantage

A

the ability to produce a product or service at a lower absolute cost than another producer

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7
Q

comparative advantage

A

the ability to produce a product or service at a lower opportunity cost than another producer

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8
Q

model

A

a simplified representation of the real world, focusing attention on what’s important for understanding

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9
Q

inputs

A

the productive resources- labour, natural resources, capital equipment, and entrepreneurial ability- used to produce products and services

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10
Q

positive statements

A

about what is: can be evaluated as true or false by checking the facts

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11
Q

normative statements

A

about what you believe should be: involve value judgements

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12
Q

microeconomics

A

analyzes choices that individuals in households, individual businesses, and governments make, and how those choices interact in markets

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13
Q

macroeconomics

A

analyzes performance of the whole Canadian economy an global economy, the combined outcomes of all individual microeconomic choices

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14
Q

marginal benefits

A

additional benefits from the next choice

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15
Q

marginal opportunity costs

A

additional opportunity costs from the next choice

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16
Q

implicit costs

A

opportunity costs of investing your own money or time

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17
Q

negative (or positive) externalities

A

costs (or benefits) that affect others external to a choice or a trade

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18
Q

demand

A

consermers’ willingness and ability to par for a particular product or service

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19
Q

marginal benefit

A

the additional benefit from a choice, changing with circumstances

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20
Q

quantity demanded

A

amount you actually plan to buy at a given price

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21
Q

market demand

A

sum of demands of all individuals willing and able to buy a particular product or service

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22
Q

law of demand

A

if the price of a product or service rises, quantity demanded decreases, other things remaining the same

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23
Q

demand curve

A

shows the relationship between price and quantity demanded, other things remaining the same

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24
Q

increase in demand

A

increase in consumers’ willingness and ability to pay

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25
Q

decrease in demand

A

decrease in consumers’ willingness and ability to pay

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26
Q

substitutes

A

products or services used inplace of each other to satisfy the same want

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27
Q

complements

A

products or services used together to satisfy the same want

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28
Q

normal goods

A

products or services you buy more of when your income increases

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29
Q

inferior goods

A

products or serviecs you buy less of when your income increases

30
Q

marginal cost

A

additional opportunity cost of increasing quantity supplied, changing with circumstances

31
Q

sunk costs

A

past expenses that cannot be recovered

32
Q

supply

A

businesses’ willingness to produce a particular product or service because price covers all opportunity costs

33
Q

quantity supplied

A

the quantity you actually plan to supply at a given price

34
Q

marginal opportunity cost

A

complete term for any cost relevant to a smart decision

35
Q

market supply

A

sum of supplies of all businesses willig to produce a particular product or service

36
Q

law of supply

A

if the price of a product or service rises, quantity supplied increases

37
Q

supply curve

A

shows relationship between price and quantity supplied, other things remaining the same

38
Q

increase in supply

A

increase in businesses’ willingness to supply; rightward shift of supply curve

39
Q

decrease in supply

A

decrease in business’s willingness to produce; leftward shift of supply curve

40
Q

market

A

the interactions between buyers and sellers

41
Q

property rights

A

legally enforceable guarantees of ownership of physical, financial, and intellectual property

42
Q

shortage or excess demand

A

quantity demaded exceeds quantity supplied

43
Q

surplus or excess supply

A

quantity supplied exceeds quantity demanded

44
Q

market-clearing price

A

the price that equalizes quantity demanded and quantity supplied

45
Q

equilibrium price

A

the price that equalizes quantity demanded and quantity supplied, balancing the forces of competition and cooperation, so that there is no tendency for change

46
Q

comparitive statics

A

comparing two equilibrium outcomes to isolate the effect of changing one factor at a time

47
Q

consumer surplus

A

the difference between the amount a consumer is willing and able to pay, and the price actually paid

48
Q

producer surplus

A

the difference between the amount a producer is willing to accept, and the price actually received

49
Q

total surplus

A

consumer surplus plus producer surplus

50
Q

deadweight loss

A

the decrease intotal surplus compared to an economically efficient outcome

51
Q

efficient market outcome

A

consumers buy only products and services where marginal benefit is greater than marginal cost; products and services produced at lowest cost with price just covering all opportunity costs of production

52
Q

elasticity (or price elasticity of demand)

A

measures by how much quantity demanded responds to a change in price

53
Q

inelastic demand

A

small response in quantity demanded when price rises

54
Q

elastic demand

A

large response in quantity demanded when price rises

55
Q

perfectly inelastic demand

A

price elasticity of demand equals zero; quantity demanded does not respond to a change in price

56
Q

perfectly elastic demand

A

price elasticity of demand equals infinity; quantity demanded has an infinite response to any change in price

57
Q

total revenue

A

al money a business receives from sales, equal to price per unit (P) multiplied by quantity sold (Q)

58
Q

elasticity of supply

A

measures by how much quantity supplied responds to a change in price

59
Q

inelastic supply

A

small response in quantity supplied when price rises

60
Q

elastic supply

A

large response in quantity supplied when price rises

61
Q

perfectly inelastic supply

A

price elasticity of supply equals zero; quantity supplied does not respond to a change in price

62
Q

perfectly elastic supply

A

price elasticity of supply equals infinity; quantity supplied has infinity response to a change in price

63
Q

cross elasticity of demand

A

measures the responsiveness of the demand for a product of service to a change in the price of a substitute or complement

64
Q

income elasticity of demand

A

measures the respinsiveness of the demand for a product or service to a change in income

65
Q

income inelstic demand

A

for normal goods that are necessities, the percentage change in quantity is less than the percentage change in income

66
Q

income elastic demand

A

for normal goods that are luxuries, the percentage change in quantity is greater than the percentage change in income

67
Q

tax incidence

A

the division of a tax between buyers and sellers

68
Q

Elasticity of supply =

A

% change in quantity supplied/% change in price

69
Q

First key

A

Additional benefits vs. Opportunity costs

70
Q

Second key

A

Additional benefits and costs

71
Q

Key 3:

A

Implicit costs and externalities

eco105 (1 decks)

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