Exam 1 Study Guide

Exam 1 Study Guide - A bsolute Advantage- the ability to...

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Absolute Advantage - the ability to produce a good using fewer inputs than another producer; measured in terms of the inputs required to produce it (not necessary for comparative advantage) Budget Constraint - slope; the limit on the consumption bundles that a consumer can afford Change in Supply - when a non-price determinant of supply changes (like technology or costs) Comparative Advantage - the ability to produce a good at a lower opportunity cost than another producer Competitive Market - many buyers/sellers, has a negligible effect on price Complements - if an increase in the price of one good causes a fall in demand for the other (college tuition and textbooks, bagels and cream cheese) Consumption Bundle - a particular combination of the goods (40 fish, 300 mangos) Cross-Price Elasticity of Demand - % change in Qd for good 1/% change in price for good 2; measures the response of demand for one good to changes in the price of another D-Curve - when vertical, elasticity =0; when relatively steep, elasticity < 1; when intermediately steep, elasticity=1; when relatively flat, elasticity > 1; when horizontal, elasticity is infinity Demand Schedule - a table that shows the relationship between the price of a good and the qty demanded Economics - the study of how society manages its scarce resources Efficiency - when society gets the most of its scarce resources Elasticity - A measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants Equality - when prosperity is distributed uniformly among society’s members Equilibrium Price - the price that equates qty supplied with qty demanded (price at which where the supply and demand lines cross) Equilibrium Quantity - the qty supplied and qty demanded at the
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Exam 1 Study Guide - A bsolute Advantage- the ability to...

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