Details Title: 202 Description: Test One Total Flash Cards: 33 Created: 02/16/2009 22:41:57		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Economics Flashcards
Cards in this set: Term Labor Definition The physical and mental effort used to produce goods and services. Term Capital Definition The buildings, equipment and human skills used to produce goods and services Term Scarcity Definition Occurs when the amount people desire exceeds the amount available. Term Rational Self Interest Definition Each individual pursuing his or her own self interest is pursuing societies interest. Term Marginal Cost Vs. Marginal Benifit Definition Marginal Benefit/Marginal Cost Term Characteristics of pure capitalism Definition Private ownership of resources. The use of prices to coordinate economic activity in unregulated markets. Term Opportunity Cost Definition The value of the best alternative forgone when an item or activity is chosen. Term Law of Comparative Advantage Definition The individual firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in that good. Term Three Basic Questions Definition What to produce. How to produce it. For whom to produce. Term Utility Definition The satisfaction received from consumption; sense of well being. Term Tariff Definition A tax on imports Term Quota Definition A legal limit on the quantity of a particular product that can be imported. Term Law of Demand Definition The quantity of a good that consumers are willing and able to buy per period relates inversely to the price, other things constant. Term Demand Curve Definition A curve showing the relation between the price of a good and the quantity consumers are willing and able to buy per period, other things constant. Term Absolute Advantage Definition The ability to make something using fewer resources than other producers use. Term Comparative Advantage Definition The ability to make something at a lower opportunity cost than other producers face. Term Barter Definition The direct exchange of one good for another without using money Term Production Possibilities Frontier (PPF) Definition A curve showing alternative combinations of goods that can be produced when available resources are used efficiently; a boundary line between inefficient and unattainable combinations. Term Pure Command System Definition An economic system characterized by the public ownership of resources and centralized planning. Term Monopoly Definition A sole supplier of a product with no close substitutes. Term Externality Definition The cost or a benefit that affects neither the buyer or seller, but instead affects people not involved in the market transaction. Term Demand Definition A relation between the price of a good and the quantity that consumers are willing and able to buy per period, other things constant. Term Supply Definition A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant Term Surplus Definition At a given price, the amount by which quantity supplied exceeds quantity demanded; a surplus usually forces the price down. Term Shortage Definition At a given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the prices up. Term Equilibrium Definition The condition that exists in a market when the plans of buyers match those of sellers, so quantity demanded equals quantity supplied and the market clears. Term Price Floor Definition A minimum legal price below which a product cannot be sold; to have an impact, a price floor must be set above the equilibrium price. Term Price Ceiling Definition A maximum legal price above which a product cannot be sold; to have an impact, a price ceiling must be set below the equilibrium price. Term Price Elasticity of Demand Formula Definition Percentage change in quantity demanded/percentage change in price. Term Inelastic Demand Definition A change in price has little effect on quantity demanded. The percentage change in quantity demanded is less than the percentage change in price; the resulting price elasticity is less then 1. Term Elastic Demand Definition A change in price has large effect on quantity demanded; the quantity demanded exceeds the percentage change in price; the resulting price elasticity is greater than 1. Term Total Revenue Formula Definition TR=PxQ Term Price Elasticity of Supply Formula Definition Percentage change in quantity supplied/ percentage change in price