| Terms |
Definitions |
|
YOU ARE
|
BEAUTIFUL
|
|
Surplus
|
when supply exceeds demand
|
|
Goods
|
Any item desired by people
|
|
MODEL
|
a simplified representation of reality that is used to better understand real-life situations
|
|
individuals, firms, and nations select the option with the lowers opportunity costs
|
specialization
|
|
externalities
|
costs/benefits of the market activity borne by a third party; the diff btwn soc. and private costs/benefits of a market activity
|
|
Labor
|
People's physical and mental talents and efforts that are used to help produce goods and services
|
|
Is supply normally elastic or inelastic in the long run?
|
Elastic
|
|
land
|
all natural resources, such as minerals, timber, and water, as well as the land itself
|
|
growth (IA1)
|
increase in income and wealth; measured in terms of per capita income or wealth
|
|
price floor
|
can lead to economic surpluses. minimum price along equilibrium.
|
|
SUPPLY & DEMAND MODEL
|
due to competition
demand curve
supply curve
factors that cause shift
equilibrium (price & quality)
changes in supply & demand
|
|
Trading Triangle
|
Both consumers and producers happy, transactions happen
|
|
Demand Schedule
|
A table showing the relationship between quantity demanded and the price of a commodity, other things being equal
|
|
Government Purchases
|
Expenditures by government for goods and services that government consumes in providing public goods and for public capital that has a long lifetime; the expenditures of all governments in the economy for those final goods and services.
|
|
What curve plummets quickly, then evens out?
|
fixed cost
|
|
Scarcity (No-Free-Lunch)
|
Unlimited needs and wants against limited resources. Having more of one good thing means having less of another
|
|
Import demand curve-
|
A down-sloping curve showing the amount of a product that an economy will import at each world price below the domestic price.
|
|
rent ceiling
|
when price ceilings are applied to housing markets
|
|
major probs with health care
|
-lots of uninsured-escalading costs(conflict of interests ex. lawyers vs doctors vs insurance companies)
|
|
Budget Constraint
|
The limit on the consumption bundles that a consumer can afford
|
|
Following the Decision rule will lead to:
|
Utility maximization
|
|
Graphically, which curve can help you tell for certain whether a market is perfectly competitive or one of the other types?
|
D Curve
|
|
Interest-Rate Cost-Of-Funds-Curve
|
As it relates to research and development (R&D), a curve showing the interest rate the firm must pay to obtain any particular amount of funds to finance R&D.
|
|
Monopolistic Competition
|
Market structure of an industry in which there are many firms and freedom of entry and exit but in which each firm has a product somewhat differentiated from the others, giving it some control over its price
|
|
Non-dominant Strategy
|
a player will change his decision based on the other person's decisions
|
|
Specialization
|
the use of resources of an individual, region, or nation to produce one or a few goods and services rather than the entire range of products
|
|
net change in price from previous day's closing price
|
Net Change
|
|
economics
|
study oc choices people make to get their goal given scarce resources
|
|
Equilibrium world price-
|
the price of an internationally traded product that equates the quantity of the product demanded by importers with the quantity of the product supplied by exporters; determined at the intersection of the export supply curve and the import demand curve.
|
|
factors that influence elasticity of demand
|
*closeness of substitutes*proportion of income spend on the good*the time elapsed since a price change
|
|
quota
|
the upper limit on the amount of g/s that can be bought/sold
|
|
Short Run
|
A period of time in which producers are able to change the quantities of some but not all of the resources they employ; a period in which some resources are fixed and some are variable.
|
|
DEMAND CHANGE:
Change in Quantity
|
only prices change along existing curve
|
|
Product Differentiation
|
A strategy in which one firm's product is distinguished from competing products by means of its design, related services, quality, location, or other attributes (except price).
|
|
Average Revenue (AR)
|
total revenue divided by the quantity of the product sold
AR = TR / Q
|
|
Nonrenewable (exhaustible) natural resources
|
natural resources whose supply is fixed
|
|
As long as MC lies below ATC
|
ATC will fall
|
|
Competitive Market
|
many buyers and many sellers so that each has a negligible impact on the market price.
|
|
long-run industry supply curve
|
shows how the quantity supplied responds to the price once producers have had time to enter or exit the industry
|
|
Decision to Migrate
|
A person who estimates that the stream of future earnings exceeds the explicit and implicit costs of moving will migrate and those who don't, won't.
|
|
Prisoners dilemma
|
a game in which each player has a dominant strategy, and when each plays it, the resulting payoffs are smaller than if each had played a dominated strategy
|
|
Interest Rate
|
amount of money a borrower pays to a lender in exchange for the use of that lender's money
|
|
Inelastic
|
a change in P leads to a SMALLER % change in QD
|
|
If MR > MC, then __ q to max profit.
|
increase
|
|
Average Product (AP)
|
Total product divided by the number of units of the variable factor used in its production
|
|
Personal Distribution of Income
|
The manner in which the economy's persoanl or disposable income is divided among different income classes or different households or families.
|
|
tax incidence
|
the actual division of the burden of a tax between buyers and sellers in a market
|
|
Inelastic Demand
|
The price elasticity of demand is less than one.
|
|
Average Total Cost (ATC)
|
A firm's total cost divided by output (the quantity of product produced); equal to average fixed cost plus average variable cost.
|
|
Long-run Average Cost Curve
|
a curve showing the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed.
|
|
World Trade Organization (WTO)
|
An organization of 149 nations (as of fall 2006) that oversees the provisions of the current world trade agreement, resolves trade disputes stemming from it, and holds forums for further rounds of trade negotiations.
|
|
Five fundamental questions of market system economy...
|
What will be produced?
How will goods be produced?
Who will recieve goods/services?
How will the system accomodate change?
How will the system promote progress?
|
|
The equilibrium quantity in markets characterized by oligopoly is...
|
higher than in monopoly markets and lower than in perfectly competitive markets
|
|
How does a fall in price affect marginal utility and marginal utility per dollar spent on a good?
|
it does not change marginal utility
it causes the marginal utility per dollar spent to increase
the consumer can now increase his/her utility by purchasing more of that good and less of other goods
|
|
what happens to the optimal consumption bundle if income falls?
|
if it is a normal good: consumption of both goods fall, optimum consumption bundle falls
if it is an inferior good: consumption of one (or both if they're somehow both inferior) actually increases (shifts right along the new indifference curve), OR one good increases but the other good falls, indidcating that one is a normal good and one is inferior
the OCB falls overall
|
|
why are pure monopolies no good for consumers
|
if they were broken up the price would be lower
|
