Term
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Definition
| The study of the choices that individuals make given the presence of scarcity. |
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Term
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Definition
There are limited resources but unlimited wants.
Poverty is subjective.
Scarcity does not mean poverty. |
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Term
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Definition
Land
Nonhuman animal resources
Labor
Capital
Technology
Entrepreneurial Ability
(Called commodities when all combined) |
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Term
| Three Questions of Economics |
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Definition
1. What, and how much, will we produce?
2. How do we produce it?
and, 3. For whom do we produce it?
ALL ISSUES OF ALLOCATION. |
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Term
| 9 Guideposts to Economic Thinking |
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Definition
1. Decision-makers choose purposefully.
2. Costs/benefits = subjective
3. Incentives matter
4. Individuals make decisions at the margin
5. Opportunity costs
6. Acquisition of Info. is Costly
7. Anticipate unintended consequences
8. The test of a theory is its ability to predict.
9. Forces Influence Economic Outcomes |
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Term
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Definition
A statement that can be tested, proven, or disproven.
Ex: We lost an estimated 1000 species a year to extinction. |
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Term
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Definition
Statement of opinion, cannot be proven or disproven.
Ex: Pres. Bush should have increased the level of federal aid provided for hurricane relief. |
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Term
| Production Possibility Fronteir (PPF) |
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Definition
| A graph that shows the combinations of 2 commodities that can be produced given a fixed leel of tech. and resources being used efficiently at a fixed point in time. |
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Term
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Definition
| If you have the lowest opportunity cost of producing something. |
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Term
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Definition
| If you can produce more of a good with the same amount of resoures as someone else. |
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Term
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Definition
| The rights to use, control and obtain the benfits from a good or service. |
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Term
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Definition
| Property rights that are exclusively held by an owner and protected against invasion by others. Can be transferred, sold, or mortgaged at owner's discretion. |
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Term
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Definition
| Problem of overuse of a resource when property rights are not clearly established. |
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Term
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Definition
| The amount of a good that households want to consume given their income and prices in a given period. |
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Term
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Definition
| As the price of a good increases, the quantity demanded falls. |
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Term
| Law of diminshing marginal benefit |
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Definition
| As more units of a good are consumed, additional units provide less benefit. |
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Term
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Definition
| Amount consumer is willing to pay - amount actually must pay |
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Term
SUPPLY
(Thinking like the producer) |
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Definition
| The amount of a commodity that a firm plans to sell in a given time period at a given price. |
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Term
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Definition
| As the price for which a good can be sold increases, the quantity of that good that is supplied will increase. |
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Term
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Definition
| Amount actually paid to producer - amount must be paid to be willing to provide the good |
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Term
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Definition
Excise tax on an imported good
Excise tax= tax on a specific good |
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Term
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Definition
| A quantative restriction on the amount that one country can export to another. |
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Term
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Definition
| An upper limit set on a price |
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Term
Binding
(Causes a shortage) |
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Definition
| A price control is said to be binding or effective if it keeps the price in the market from reaching the equilibrium price level. |
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Term
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Definition
Lower limit set on a price
Can be bending when the price floor is set above equilibrium |
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