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| inputs into the process of production- resources |
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| the process that transforms scare resources into useful goods and services |
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| anything provided b nature or previous generations that can be used for humans |
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| the best alternative that we can give or forgo when we make a choice |
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| theory of comparative advantage |
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Definition
| theory that specialization and free trade will benfit all trading parties, even those that may be more efficient producers |
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| producer has an absolute advantage over another in production if they are able to produce using fewer resources |
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| in the production- it can produce that product at a lower opportunity cost |
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| goods produced for present consumption |
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| the process of using resouces to produce new capital |
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| an increase in the total output of an economy- occurs when a society acquires new resources or in learning to produce with fewer resources |
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| an economy inwhich a central government directly or indirectly sets output targest, incomes, and prices |
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| 'allow them to do' economy in which individual people and firms pursue their own interests without direction or regulation |
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Definition
| where buyers and sellers engage in exchange |
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| what gets produced, how it is produced, who gets what is produced. |
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| organization that transforms resources and products- primary producing units in a market economy |
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| consuming units of the economy |
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Definition
| input/factor market in which households supply work for wages to firms |
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Definition
| input/factor market in which households supply their savings for interest or for claims to future profits |
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| input/factor market in which households supply land or real property in exchange for rent |
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Term
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Definition
| table showing how much of a given product a household would be willing to buy at different prices |
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| sum of all households wages, salaries, profits, interest payments, rents, ALL earnings in a given period of time |
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| total value of what a household earns minus what they owe |
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| demand goes up when income is higher |
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Definition
| demand goes down when income is higher |
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Term
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Definition
| goods that are replacements of one another. when a price of one increases- demand for other goes up |
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Term
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Definition
| goods that go together- decrease in a price of one means an increase in the demand of the other |
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Term
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Definition
| leads to change in quantity demanded- moves along the curve |
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Term
| change of income/preferences |
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Definition
| change in demands-shift of demand curve |
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| sum of all quantities of a good demanded per period by all households buying in the market for that good |
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| amount of a particular product that a firm would be willing and able to offer for sale at a price during a given time period |
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Term
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Definition
| positive relationship between price and quantity of a goo supplied- an increase in market price will lead to an increase in quantity supplied and a decrease in market price will lead to a decrease in quantity supplied |
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Term
| Causes of Shifts in market supply |
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Definition
-change in production cost
-government taxes
-climates
-change in technology
-change in number of producers/suppliers in the market
-change in the price of substitutes in the market |
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Term
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Definition
| causes a change in quantity supplied- along the supply curve |
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Term
| change in costs, input, technology, prices of related goods and services |
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Definition
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Term
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Definition
| the condition that exists when Qs and Qd are equal- there will be no tendency for price to change here |
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| Qd is higher than Qs at the current price |
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Definition
| Qs is more than Qd at the current price |
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Term
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Definition
| whenver there is a need to ration a good (when a shortage exists) in a free market- the price of the good will rise until Qs = Qd |
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Term
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Definition
| whenver there is a need to ration a good (when a shortage exists) in a free market- the price of the good will rise until Qs = Qd |
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Term
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| a maximum price that sellers may charge for a good- usually set by the government |
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Term
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minimum price below which exchange is not permitted
minimum wage is an example- price floor set under the price of labor |
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| the difference between the maximum amount a person is willing to pay for a good and it's current market price |
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| the difference between the current market price and the full cost of production for the firm |
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| the net loss of producer and consumer surplus from underproduction or overproduction |
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Definition
| economy as a whole- total national income, deals with aggregates, consumption, investment, overall level of prices |
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Definition
| the behavior of all households and firms together |
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Definition
| The state, according to Keynesian economics, can stimulate economic growth and improve stability in the private sector - through, for example, interest rates, taxation and public projects. |
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Term
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Definition
1. Prices of different goods including substitutes
2. Number of suppliers
3. Production function and technology
4. Prices of different inputs including wage rates, interest.
5. Producers' future expectations |
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Term
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Definition
1.change in preferences of consumer
2. # of consumers in the market
3. incomes
4. price of related goods
5.consumer expectations |
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