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| a group of buyers and sellers of a particular good or service eg. Cable company |
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| a market in which there are many sellers so that each has a negligible impact on the market price |
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two characteristics:
1.the goods being offered for
sale are all the same
2 the buyers and llers are numerous that no single buyer or seller can influence the market price
B/C buyers and sellers are in perfect competition- markets must accept the price the market determines, --- they are called PRICE TAKERS |
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| A firm that is the sole seller of a product w/o close substitutes |
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| a market structure in which only a few sellers offer similar or identical products |
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| Monopolistically competitive- ion |
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Definition
contains many sellers each offering a slightly diff product
a market structure in which many firms sell products that are similar but not identical
the quantity demanded is negitivly related to the price |
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| the amount of a good that buyers are willing to purchase |
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| the claim that other things equal.the quantity demanded of a good falls when the price of the good rises |
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A good which other things equal an increase in income leads to an increase in demand
if the demand for a good falls when income falls, the good is called a normal good
If the demand for a good rises when the income falls it is then called and inferior good |
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Definition
A good for which other things equal an increase in income leads to a decrease in demand
eg bus rides |
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Two goods for which an increase in the price of one leads to an increase in the demand for the other
they are often pairs of goods that are used in place of each other--hotdogs and hamburgers |
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Definition
Two goods fr whic an increase in the prie of one leads to a decrease in the demand for the other
these goods are also used in pairs--- eg gas and automobiles |
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Definition
the biggest determinant of your demand is taste
when tastes change, your demand changes. |
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Definition
a table that shows the relationship b/tween the price of a good and the quantity demanded
this table shows the quantity demanded @ each price |
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A graph of the relationship b/tween the price of a good and the quantity demanded
it may be a curve or a straight line
shows what happens to the quantity demandee of a good when its price varies, holding constant all other determinans of quantity demanded
when one of these changes... the demand curve shifts. |
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Term
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Definition
| latin phrase----other things being equal --- used as a reminder that all variables other than the ones being studied are assumed to be constant |
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Definition
the amount of a good that sellers are willing to sell.
-is positively related to the price of the good |
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Definition
| The claim that , other things equal the quantity supplied of a good rises when the price of the good rises |
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Definition
| The supply of a good is negatively related to the price of the inputs used to make the good |
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| A table that shows the relationship b/tween the price of a good and the quantity supplied |
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Definition
A graph of the relationship b/tween the price of a good and the quantity supplied
the supply curve slopes up ward-- b/c ceteris paribus--- a higher price means a greater quantity supplied
shows what happens to the quantity supplied of a good when its price varies, holding constant all other determinants of quantity supplied. When one of these other determinants changes, the supply curve shifts
it may be straight line or curved
"Supply" refers to the position of the supply curve--- quantity suplied refers to the amount suppliers wish to sell
A shift in the supply curve is called a change in supply and a shift in the demand curve is called a change in demand
a movement along a fixed demand curve is clled a change in the aquantity demanded. |
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Term
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Definition
Is the sum of the supplies of all sellers
it depends on all those factors tha tinfluence the supply of individual sellers.. like the prices of inputs used to produce the good .. the avialable technology and expectations
the supply in the market depends on the # of sellers
the sum of the individual supply curves horizontally to obtain the market supply curve. |
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Definition
| A situation in which suppy and demand have been brought into balance-- the place where the supply and demand curve intersect -- equilibrium |
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Definition
The price tha balances supply and demand
the place where the supply and demand curves cross--- horizontallly--is equil. price
At the equilibrium price... the quantity of the good that buyers are willing to buy exactly balances the quantity so that sellers are willing to sell. |
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Definition
The quantity supplied and the quantity demanded when the price has adjusted to balance supply and demand.
where the supply and demand curves cross-- vertical -- |
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Definition
A situation in which quantity supplied is greater than quantity demanded
Suppliers are unable to sell all they want at the going price.
the prices continue to fall until equilibruim is reached |
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Definition
A situation in which quantity supplied is greater than qunatity demanded
Demanders are unable to buy all they want @ the going price,. With too many buyers chasing to few goods, sellers can only respond to the shortage by raising their prices without losing sales. |
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Definition
Society has limited resources
therefore it cannot produce all the goods people wish to have |
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Term
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Definition
Study of how soceity manages its scarce resources
Economists--- study peoples decisions
---The interaction of people person to person |
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Priciples of Econ
1
People Face Tradeoffs |
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Definition
no free lunch -- trade something for another
classic tradeoff--- guns and butter
--- Efficiency&Equity
When the governt tries to cut the economic pie into more equal sized... the pie gets smaller |
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Definition
| The property of society getting the most it can from its scarce resouces |
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Definition
| The propeperty of distributing economic prosperity fairly among the members of society |
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Term
Principles of Econ
2
The cost of something is what you give up to get it ! |
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Definition
Making decisions requires comparing the COSTS and BENIFITS of alternative courses of action
OPPORTUNITY COST ! |
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Term
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Definition
| Whatever must be given up to obtain some item |
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Term
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Definition
| Small incremental adjustments to a plan of action |
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Term
Principles of Econ
3
Rational People think @ the Margin |
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Definition
Individuals can make better decisions by thinking @ the margin
A rationa decision maker takes an action if and only if the marginal exceeds the marginal cost |
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Term
Principles of Econ
4
People respond to incentives |
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Definition
B/C.ppl make decisions by comparing COSTS and BENIFITS their behavior may change when the costs or benifits change
If policy akers change incentives,, it will cause ppl to alter therir behavior |
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Term
Principle of Econ
5
Trade can make Everyone Better Off |
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Definition
Trade allows each person to specialize in the activities he/swhe does best
People cna buy a greater variety of ggods and services @ lower cost |
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Term
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Definition
| An economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
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Term
Priciples of Econ
6
Markets are usually a GOOD way to organize economic activity |
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Definition
| when the governt prevents prices from adjusting naturally to supply and demand it impedes the invisible hand's ability to coordinate the millions of households nad firms that make up the economy |
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Term
Principles of Econ
7
Governt can sometimes improve market outcomes |
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Definition
2 reasons for a governt to intervene in the economy
- to promote efficiency
- to promote equity |
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Term
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Definition
| A situation in which a market left on its fails to allocate resources efficiently |
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Definition
| The inpact of one person's actions on the well-being of a bystander |
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Term
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Definition
| The ability of a single economic actor (or small group of actiors)to have a substantial influence on market prices |
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Term
Principles of Econ
8
A country's standard of living depends on its ability to produce goods & services |
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Definition
Productivity is #1 when it comes to living standards
To boost living standards
-workers are well educated
-have the tools needed to produce goods and services
-access to avialable technology |
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Term
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Definition
| The amount of goods and services produced from each hour of a worker's time |
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Definition
| An increase in the overall level of prices in the economy |
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Definition
| A curve that shows the short-non trade off b/tween inflation and unemployment |
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Term
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Definition
A visual model of the economy that shows how dollars flow through markets among households and firms
2 types of decision makers
- households
- firms
Production --> Consumers |
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Term
| Production Possibilties Frontier |
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Definition
A graph that shows the combo of output that the economy can possibliy produce given the abialable factors of production and the available production tech.
shows output that the economy can possibly produce |
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Definition
| The study of how households and firms make decisions and how they interact in markets |
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Term
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Definition
| Claims that attempt to prescribe the world AS IT IS |
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Term
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Definition
| Claims the attempt to prescribe how the world SHOULD BE |
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| Difference between Positive and Normative Statements |
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Definition
| how we judge their validity |
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Definition
Economists disagree about the validity of alternative postive theories about how the world works
They may have diff values therefore diff normative views about what policy should try and accomplish |
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Definition
| The oomparison among producers of a good according to their productivity |
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Definition
| The comparison among producers of a good according to their opportunity cost |
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Term
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Definition
| Goods & Services that are produced abroad and sold domestically |
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Term
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Definition
| Goods and Services that are produced domestically and sold abroad |
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