Supply and Demand/intro Flashcards

1
Q

The marginal principle

A

Decision making rule when you are dealing with a “how much of something”
Choose the option that MB=MC

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2
Q

The cost-benefit principle

A

The costs and benefits of options are what drive us in decision making

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3
Q

The opportunity-cost principle

A

Everything you give up when you make a decision is the opportunity cost

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4
Q

The interdependence principle

A

The principle that decision making is based on the overall context and decisions

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5
Q

fixed costs

A

Costs that stay constant no matter what

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6
Q

variable costs

A

A cost that changes depending on the amount of production

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7
Q

rational rule for sellers

A

Rule that sellers should sell and produce a good only if it’s price is greater than or equal to the marginal cost of producing it

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8
Q

rational rule for buyers

A

Buyers should only purchase goods if the marginal benefit is greater than or qual to the price

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9
Q

marginal product

A

The amount of product gained from adding an input into the business

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10
Q

diminishing marginal product

A

When the output gained from an added input is not as great as the last input

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11
Q

supply curve shifters

A

-changes in input prices
-changes in the price or related goods
-Changes in expectations
-changes in technology
-changes in the number of producers

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12
Q

demand curve shifters

A

-change in price of related goods
-Changes in income
-change in expectations
-change in # of consumers
-changes in preference
-network congestion effects

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13
Q

The four main principles of Economics

A

Cost-Benefit principle, Opportunity Cost principle, Marginal principle, Interdependence principle

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14
Q

Willingness to pay

A

how much you are willing to pay for this good/service?

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15
Q

Production Possibilities Frontier

A

Graph that depicts the possible production options with the amount of resources given

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16
Q

Trade-offs

A

what you give up when you make a decision

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17
Q

Marginal Principle

A

Principle used to decided how much of something to buy (incrementally)

18
Q

Marginal Benefit

A

the added benefit from one more of something

19
Q

Marginal Cost

A

the added cost of buying one more of something

20
Q

Rational Rule

A

this rule says you should keep on doing something until the marginal benefits equals the marginal cost

21
Q

Interdepence choice

A

the awareness that your best choice is dependent on the other choices

22
Q

Positive statement

A

Factual statements that can be proven

23
Q

Normative Statements

A

statements that are made based on opinion and belief about what should be done/considered.

24
Q

Law of Demand

A

As price increases, consumers demand a lower quantity of good

25
Law of Supply
As the price increases the quantity supplied will increase
26
Marginal benefit
the added benefit you get from one more unit of good
27
Marginal cost
the extra cost of one more of something
28
absolute advantage
the option that has the overall most benefit at making/producing something
29
comparative advantage
which option has less opportunity cost
30
What is Market quantity supplied?
the total of all producer's individual quantity supplied
31
If the price of a good's input increases, what happens to the supply curve?
The supply curve will shift left (supply decreases)
32
If the price of a complement in production increases, what happens to the supply?
The supply (curve) will increase
33
If the price of a complement in production decreases, what happens to the supply?
The supply (curve) will decrease
34
If the price of a substitute in production increases then what happens to supply?
The supply (curve) will decrease
35
if the price of a substitute in production decreases, what happens to supply?
The supply (curve) will increase
36
If expected prices are to increase in the future, how does this affect supply right now?
The supply (curve) will decrease
37
If expected prices are to decrease in the future, how does this affect supply right now?
The supply(curve) will increase
38
Technological advancements in production cause supply to...
shift right/increase
39
If more producers enter the market then supply...
Increase/shifts right
40
if producers leave the market then supply...
decreases/shifts left
41