Term
| Production possibilities frontier (PPF) |
|
Definition
the boundary between those combinations of goods and services that can be produced and those that cannot. We cannot attain the points outside the frontier. We can produce at any point inside the PPF and on the PPF. |
|
|
Term
|
Definition
| when we cannot produce more of one good without producing less of some other good; a point on the PPF |
|
|
Term
|
Definition
the opportunity cost of producing one more unit of it; the slope of the PPF |
|
|
Term
|
Definition
| a description of a person’s likes and dislikes |
|
|
Term
|
Definition
the benefit received from consuming one more unit of it Measured by the most that people are willing to pay for an additional unit of it The willingness to pay for something measures its marginal benefit |
|
|
Term
|
Definition
shows the relationship between the marginal benefit from a good and the quantity of that good consumed The more we consume of any one good or service, the more we can see other things that we would like better |
|
|
Term
|
Definition
when we cannot produce more of any good without giving up some other good that we value more highly |
|
|
Term
|
Definition
expansion of production; increases our standard of living, but doesn’t overcome scarcity and avoid opportunity cost We face a tradeoff-the faster we make production grow, the greater is the opportunity cost of economic growth |
|
|
Term
|
Definition
| the development of new goods and of better ways of producing goods and services |
|
|
Term
|
Definition
| the growth of capital resources, including human capital |
|
|
Term
|
Definition
| a market that has many buyers and many sellers, so no single buyer or seller can influence the price |
|
|
Term
|
Definition
| The price of an object is the number of dollars that must be given up in exchange for it |
|
|
Term
|
Definition
| the ratio of one price to another; an opportunity cost |
|
|
Term
|
Definition
the amount that consumers plan to buy during a given time period at a particular price; not necessarily the same as the quantity actually bought; measured as amount per unit of time |
|
|
Term
|
Definition
| other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded |
|
|
Term
|
Definition
when the price of a good rises, other things remaining the same, its relative price-its opportunity cost-rises |
|
|
Term
|
Definition
| when a price rises and all other influences on buying plans remain unchanged, the price rises relative to people’s incomes |
|
|
Term
|
Definition
refers to the entire relationship between the price of the good and the quantity demanded of the good |
|
|
Term
|
Definition
When any factor that influences buying plans other than the price of the good changes |
|
|
Term
|
Definition
a good that can be used in place of another good |
|
|
Term
|
Definition
| a good that is used in conjunction with another good |
|
|
Term
|
Definition
| one for which demand increases as income increases |
|
|
Term
|
Definition
one for which demand decreases as income increases |
|
|
Term
|
Definition
| the amount that producers plan to sell during a given time period at a particular price; measured as an amount per unit of time |
|
|
Term
|
Definition
| other things remaining the same, the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied |
|
|
Term
|
Definition
| refers to the entire relationship between the price of a good and the quantity supplied of it |
|
|
Term
|
Definition
shows the relationship between the quantity supplied of a good and its price when all other influences on producers’ planned sales remain the same |
|
|
Term
| Five main factors that bring changes in supply |
|
Definition
the prices of productive resources, the price of related goods produced, expected future prices, the number of suppliers, and technology |
|
|
Term
|
Definition
| the price at which the quantity demanded equals the quantity supplied |
|
|
Term
|
Definition
the quantity bought and sold at the equilibrium price |
|
|
Term
| Price Elasticity of Demand |
|
Definition
| a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buyers’ plans remain the same |
|
|
Term
| Perfectly Inelastic Demand |
|
Definition
| if the quantity demanded remains constant when the price changes, then the price elasticity of demand is zero |
|
|
Term
|
Definition
| If the % change in the quantity demanded equals the % change in price, then the price elasticity equals 1 |
|
|
Term
|
Definition
| the price elasticity of demand is greater than 1 |
|
|
Term
|
Definition
equals the price of the good multiplied by the quantity sold |
|
|
Term
| Cross Elasticity of Demand |
|
Definition
| a measure of the responsiveness of the demand for a good to a change in the price of a substitute or complement, other things remaining the same |
|
|
Term
| Income Elastticity of Demand |
|
Definition
| a measure of the responsiveness of the demand for a good or service to a change in income, other things remaining the same |
|
|
Term
|
Definition
| measures the responsiveness of the quantity supplied to a change in the price of a good when all other influences on selling plans remain the same |
|
|
Term
| Perfectly inelastic Supply |
|
Definition
| vertical line, illustrates the supply of a good that has a zero elasticity of supply |
|
|
Term
|
Definition
| illustrates the supply of a good with a unit elasticity of supply; positively sloping line |
|
|
Term
|
Definition
| horizontal line, illustrates the supply of a good with an infinite elasticity of supply |
|
|
Term
|
Definition
| allocates resources by the order (command) of someone in authority |
|
|
Term
|
Definition
the value (or marginal benefit) of a good minus the price paid for it, summed over the quantity bought |
|
|
Term
|
Definition
| The relationship between the price of a good and the quantity supplied by one producer |
|
|
Term
|
Definition
| the relationship between the price of a good and the quantity supplied by all producers |
|
|
Term
|
Definition
the price received for a good minus its minimum supply-price (or marginal cost), summed over the quantity sold |
|
|
Term
|
Definition
| the decrease in total surplus that results from an inefficient level of production |
|
|
Term
|
Definition
payments by the government to producers, decrease the prices paid by buyers and increase the prices received by sellers |
|
|
Term
|
Definition
| a cost or a benefit that affects someone other than the seller or the buyer of a good |
|
|
Term
|
Definition
| a good or service that is consumed simultaneously by everyone even if they don’t pay for it |
|
|
Term
|
Definition
| it is in each person’s interest to free ride on everyone else and avoid paying for her or his share of a public good |
|
|
Term
|
Definition
| owned by no one but used by everyone |
|
|
Term
|
Definition
a firm that is the sole provider of a good or service |
|
|
Term
|
Definition
| the opportunity costs of making trades in a market |
|
|
Term
|
Definition
| a regulation that makes it illegal to charge a price higher than a specified level |
|
|
Term
|
Definition
when a price ceiling is applied to housing markets |
|
|
Term
|
Definition
| the time spent looking for someone with whom to do business |
|
|
Term
|
Definition
| an illegal market in which the price exceeds the legally imposed price ceiling |
|
|
Term
|
Definition
| a regulation that makes it illegal to trade at a price lower than a specified level |
|
|
Term
|
Definition
when a price floor is applied to labor markets |
|
|
Term
|
Definition
| an hourly wage rate that enables a person who works a 40-hour work week to rent adequate housing for not more than 30% of the amount earned |
|
|
