WEEK 2 Flashcards
is a social science that
focuses on the production, distribution,
and consumption of goods and
services,
Economics
There are simply never enough resources to meet all our needs and desires.
Scarcity
obtain something that’s desired.
Opportunity Cost
work required to
produce a good or service is separated
into tasks performed by different workers
Division of Labor
workers or firms
focus on tasks for which they have an
advantage within the overall production
process (special skills, talents, and
interests)
Specialization
focuses on the actions of individual agents within the economy
Microeconomics
studies the economy as a whole.
Macroeconomics
which involves policies that affect bank lending interest rates, and financial
capital markets, is conducted by a nation’s central bank.
Monetary Policy
which involves government spending and taxes, is determined by a nation’s
legislative body.
Fiscal Policy
brings together buyers and sellers of goods and services.
Market
decisions about that products are available and at what prices are
determined through the interaction of supply and demand.
Market Economy
has a large numbers of buyers and sellers, so no one can control the
market price.
Competitive Market
government does not intervene in any way.
Free Market
willing and able to purchase at
each price.
Demand
buyer pays for a unit of a specific
good or service.
Price
total number of units
purchased at a specific price.
Quantity Demanded
other things
being equal, a higher price typically leads to a
lower quantity demanded.
Law of Demand
shows the relationship
between quantity demanded and price in a given
market on a graph (right).
Demand Curve
says that a higher
price typically leads to a higher
quantity supplied.
Law of Supply
shows the
relationship between quantity supplied
and price on a graph.
Supply Curve
they mean only a certain point on the supply
curve, or one quantity on the supply schedule.
Quantity Supplied
occur where the supply and demand curves
cross since the quantity demanded is equal to the quantity supplied.
Equilibrium Price and Equilibrium Quantity
When the price is below the equilibrium
level, excess demand?
Shortage
If the price is above the equilibrium level,
excess supply
Surplus
