TEST 1 Flashcards
(51 cards)
Types of Resources
Land. Physical Capital(Man made productions). Labor. Human Capital(Education). Entrepreneurial Ability
Types of Income
Wages. Interest. Rent. Profit
Positive Statement
Can be tested. Includes facts
Normative Statement
What should be (Value Judgments)
Opportunity Cost
Is the value of the best alternative given up when any item is chosen
Sunk Cost
A cost that has already been incurred. Money already spent
Absolute Advantage
Ability to produce a good using fewer resources
Comparative Advantage
Ability to produce a good at a lower opportunity cost
Demand:
The total amount of a good or service that consumers are willing and able to purchase
Stock Variable
Measured at a point in time
Flow Variable
Measured over a period of time. Example: Demand
Factors affecting Demand
Px, Y, Pop, Ps, Pc, T
Law of increasing opportunity cost
To keep increasing the amount of one product, the other product will increasingly go down
Factors affecting demand (Negative or Positive)
Px is negative. Y is both. Pop is +. Ps is +. Pc is negative. T is +
The law of demand
The negative relationship between Px and Qx
Normal Good
Demand that is positively related to income
Inferior Good
Demand that is negatively related to income
Change in Demand vs Change in quantity demanded
Change in Demand=Shift in curve
Change in quantity demanded=when Px changes
Supply
The amount of a good/service that firms wish to sell
Factors affecting Supply
Px, Pi, Tech, Sub, Tax
Factors affecting supply (Positive or Negative)
Px is +. Pi is neg. Tech is +. Tax is neg. Sub is +
Change in Supply vs Change in quantity supplied
Change in Supply= Curve shifts
Change in quantity supplied: When Px changes
Employed Person
Person who spent most of previous week at paid job
Unemployed Person
Person not employed but looking
