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ECN 150 > Supply and Demand/intro > Flashcards

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
Q

Law of Supply

A

As the price increases the quantity supplied will increase

26
Q

Marginal benefit

A

the added benefit you get from one more unit of good

27
Q

Marginal cost

A

the extra cost of one more of something

28
Q

absolute advantage

A

the option that has the overall most benefit at making/producing something

29
Q

comparative advantage

A

which option has less opportunity cost

30
Q

What is Market quantity supplied?

A

the total of all producer’s individual quantity supplied

31
Q

If the price of a good’s input increases, what happens to the supply curve?

A

The supply curve will shift left (supply decreases)

32
Q

If the price of a complement in production increases, what happens to the supply?

A

The supply (curve) will increase

33
Q

If the price of a complement in production decreases, what happens to the supply?

A

The supply (curve) will decrease

34
Q

If the price of a substitute in production increases then what happens to supply?

A

The supply (curve) will decrease

35
Q

if the price of a substitute in production decreases, what happens to supply?

A

The supply (curve) will increase

36
Q

If expected prices are to increase in the future, how does this affect supply right now?

A

The supply (curve) will decrease

37
Q

If expected prices are to decrease in the future, how does this affect supply right now?

A

The supply(curve) will increase

38
Q

Technological advancements in production cause supply to…

A

shift right/increase

39
Q

If more producers enter the market then supply…

A

Increase/shifts right

40
Q

if producers leave the market then supply…

A

decreases/shifts left

41
Q
A

ECN 150 (3 decks)

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