Shared Flashcard Set

Details

Micro economics
chapters 1-5
126
Economics
Undergraduate 2
09/29/2015

Additional Economics Flashcards

 


 

Cards

Term
Resources
Definition
inputs or factors of production, used to produce goods and services that people want; consist of labor, capital, natural resources and entrepreneurial ability
Term
Labor
Definition
the physical and mental effort used to poduce goods and services
Term
Capital
Definition
buildings, equipment and human skills used to produce goods and services
Term
Natural Resources
Definition
all gist of nature used to produce goods and services; includes renewable and exhaustible resources
Term
Renewable Resources
Definition
trees, solar energy, plastics
Term
Exhaustible Resources
Definition
oil, fossil fuels, elctricity
Term
Entrepreneur
Definition
profit seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and assumes the risk of that operation
Term
Entrepreneurial Ability
Definition
the imagination required to develop a new product or process, the skill needed to organize production, and the willingness to take the risk of the profit or loss
Term
Wages
Definition
payment to resource owners for their labor
Term
Interest
Definition
payment to resource owners for the use of capital
Term
Interest
Definition
payment to resource owners for the use of capital
Term
Rent
Definition
payment to resource owners for the use of their natural resources
Term
Profit
Definition
reward for entrepreneurial ability
(sales - resource cost)
Term
Good
Definition
a tangible product used to satisfy human want
Term
Service
Definition
an activity, or intangible product, used to satisfy human wants

Ex: dental, education, concerts
Term
Scarcity
Definition
when the amount people desire exceed the amount available at a zero price
Term
Market
Definition
a set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms: financial, stock, housing, tech, automobile
Term
Product Market
Definition
market in which goods and services are bought and sold; the consumer operates
Term
Resource Market
Definition
market in which a resource is bought and sold; business operates
Term
Circular Flow-Model
Definition
a diagram that traces the flow if resources products, income and revenue among economic decision makers
Term
Rational Self-Interest
Definition
each individual tries to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit
Term
Marginal
Definition
incremental, additional, or extra; used to describe a change in an economic variable
Term
Economics Fluctuations
Definition
the rise and all f economic activity relative to the long term growth trend of the economy

business cycles
Term
Economic Theory (Model)
Definition
a simplification of reality used to make predictions about cause and effect in the real world
Term
Economic Theory (Model)
Definition
a simplification of reality used to make predictions about cause and effect in the real world
Term
The Sceintific Method
Definition
...begin with a question
Term
Variable
Definition
a measure, such as price or quantity that can take on different values at different times
Term
Other Things Constant Assumption
Definition
the assumption when focusing on the relation among key economic variables, that other variables remains unchanged

Certeris Paribus
Term
Behavior Assumption
Definition
describes the expected behavior of economic decision makers; what motivates them
Term
Hypothesis
Definition
a theory about how key variables relate to each other
Term
Positive Economic Statment
Definition
a statement that can be proved or disproved by reference to facts
Term
Normative Economic Statement
Definition
statements that reflects on opinion which cannot be proved or disproved by reference to facts
Term
Association is Causation Fallacy
Definition
the incorrect idea that if 2 variables are associated in time, one must necessarily cause the other
Term
Fallacy of Composition
Definition
the incorrect belief that what is true for the individual, or part, must necessarily be true for the whole group, or the whole
Term
Secondary Effects
Definition
unintended consequences of economic actions that may develop slowly over time as people react to events
Term
Scarcity Principle
Definition
"No Free Lunch"
Term
Explicit Cost
Definition
exact cost, real number, dollar amounts
Term
Implicit Cost
Definition
implied cost, unknown costs
Term
Opportunity Cost
Definition
what is lost when a decision is made
Term
Law of Comparative Advantage
Definition
the individual, firm, region or country with the lower opportunity cost of producing a particular good should specialize in that good
Term
Absolute Advantage
Definition
the ability to make something using fewer resources than other producers were
Term
Comparative Advantae
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

Ex: Russia (oil) and Brazil (wheat)
Term
Divison of Labor
Definition
breaking down the production of a good into separate tasks; increases productivity
Term
Specialization of Labor
Definition
workers specialize at a task in the production process at which they are most efficient
Term
The Production Possibilities Frontier (PPF)
Definition
a curve showing alternative combinations of goods that can be produced when available resources are used efficiently; boundary between inefficient and unattainable combinations
Term
Efficency
Definition
the conditions that exist when there is no way resources can be reallocated to increase the production of one good without decreasing the productions of another good; all resources are employed efficiently
Term
Inefficiently
Definition
when resources are not eeployed efficiently; any point inside the PPF
Term
Unattainable
Definition
cannot be achieved with the existing resources, technology, human capital, and/or rule of the game

any point outside the PPF

Ex: Soviet Union, Asia, North Korea
Term
Economic Growth
Definition
increase in the economy's ability to produce goods and services; outward/upward shifts f the ecomony's PPF
Term
Law of Increasing Opportunity
Definition
to produce each additional increment of a good, a successively larger increment of an alternative good must be sacrificed if the economy's resources aw already being used efficiently
Term
Economic System
Definition
a set of mechanisms and institutions that resolve the what, how and for whom questions
Term
Pure Capitalism
Definition
an economic system characterized by the private ownership of resources and the use of prices to coordinated economic activity in unregulated markets
Term
Pure Capitalism
Definition
an economic system characterized by the private ownership of resources and the use of prices to coordinated economic activity in unregulated markets
Term
Adam Smith
Definition
father if micro
laissez faire
supply and demand
divison of labor
invisible hand
Term
Division of Labor
Definition
ford assembly line
Term
Invisible Hand
Definition
market/economy will fix itself
Term
Mixed Economy
Definition
economic system characterized by the private ownership of some resources and the public ownership of other resources

regulated and unregulated

Ex: Great Britian
Term
Pure Command System
Definition
economic system characterized by the public ownership of resources and centralized planning
Term
Convergence Theory
Definition
smaller the economies will grow faster than richer economies

as a result, all economonies should eventually converge in terms of per capita income

this happens because big economies help out, causing upward shifts and growth/advancement
Term
Utility
Definition
the satisfaction or sense of well being received from consumption
Term
Jeremy Bentham
Definition
utilitarianism

if it serves a purpose, keep it; if not get rid of it
Term
David Ricardo
Definition
"On the Principles of Political Economy and Taxation"

England(cloth) & Portugal(wine)-the 2 trade and costs go down

father of modern international trade
Term
Adam Smith
Definition
1776-"Wealth of Nations"
Term
Transfer Payments
Definition
cash or in kind benefits given to individuals as outright grants from the government

food stamps & social security

potential negative effects- dependency
Term
Industrial Revolution
Definition
developments of large scale factory production

1750- Great Britain
Term
Firms
Definition
economic units formed by profit seeking entrepreneurs who use resources to produce goods and services for sale
Term
Sole Proprietorship
Definition
a firm with a single owner who has the right to all profits

has unlimited liability for the firms debts

most common type of business
Term
Partnership
Definition
a firm with multiple owners who share the firms profits

all bear unlimited liability for the firms debts

only 8% of businesses

problems: money issues-embellishment
different/ conflicting visions
Term
Corporation
Definition
a legal entity by stockholders

liability is limited to the value of their stock

realized capital gain- an increase in the market value of a share that occurs between the time that the share is purchased and the time it is sold

most important in terms of total
Term
Cooperative
Definition
an organization of people who pull their resources to by and sell more efficiently then they could individually
Term
Non-Profit Institutions
Definition
groups that do not pursue profit as a goal

engage in charitable, educational, humanitarian, cultural, professional or other activities with a special purpose

Ex: United Way, St. Jude, Matthew 25
Term
Information Revolution
Definition
technological change spawned by the invention of the microchip and the Internet that enhanced the acquistion, analysis and transmission of information

Ex: banking- virtual wallets
Term
Market Failure
Definition
a condition that arises when the unregulated operations of market yields socially undesirable results

Ex: K-Mart- sues Walmart, loses products
Term
Antitrust Laws
Definition
prohibitions against price fixing and other anti-competitive practices
Term
Monopoly
Definition
a sole producer of a product for which there are no close substitutes

illegal
Term
Natural Monopoly
Definition
one firm that can sense the entire market at a lower per-unit cost than can 2 or more firms

Ex:cable- one group maintains infrastructure
Term
Private Good
Definition
both rival in consumption and exclusive

Ex: pizza
Term
Public Good
Definition
once produced, is available for all to consume, regardless of who pays for it and who doesn't

non-rival and nonexclusive

Ex: National defense
Term
Eternality
Definition
a cost of benefit that falls on a 3rd party and is therefore ignored by the 2 parties to the market

positive & negative
Term
John Maynard Keynes
Definition
the general theory
Term
Fiscal Policy
Definition
use of government purchases, transfer payments, taxes, and borrowing to influence economy-wide activity such as inflation, employment and economic growth

THE GOVERNMENT
Term
Monetary Policy
Definition
regulation if the money supply to influence economy-wide activity such as inflation, employment and economic growth

THE FED
Term
Ability-to-Pay Tax Principle
Definition
those with a greater ability to pay should pay more taxes

higher income, those who own more property
Term
Benefits-Received Tax Principle
Definition
those who receive more benefits from the government program funded by a tax should pay more taxes
Term
Tax Incidence
Definition
the distribution of tax burden among taxpayers- who ultimately pays the tax

expression
Term
Proportional Taxation
Definition
flat tax

the tax as a percentage of income remains consistent as income increases
Term
Prorgessive Taxation
Definition
tax as a percentage of income oncreases as income increases

United States
Term
Marginal Tax Rate
Definition
the percentage of each additional dollar of income that goes to the tax
Term
Regressive Taxation
Definition
the ax as a percentage of income decreases as income increases
Term
Merchandise Trade Balance
Definition
the value of a country's exported goods minus the value of is imported goods during a given period
Term
Balance of Payments
Definition
record of all economic transactions between residents of one country and residents of the rest of the world during a given period
Term
Foreign Exchange
Definition
freign money needed to carry out international transactions

Ex: Greece, Venezuela
Term
Tariff
Definition
a tax on imports; consumer pays
Term
Quota
Definition
a legal limit on the quantity of a particular product that can be imported or exported; consumer pays
Term
Demand
Definition
a relationship between the price of good and the quantity that consumers are willing and able to buy during a given period
Term
Law of Demand
Definition
the quantity of a good demanded during a given period relates reversely to a price
Term
Substitute Effect on a Price
Definition
when the price of a good falls, consumers substitute that good fr other goods, which become relatively more expensive

falls=rises
Term
Money Incime
Definition
the number if dollars a person receives per good

Ex: $400/week
Term
Real Income
Definition
income measured in terms f the good and services it can buy
Term
Income Effect of a Price Change
Definition
a fall in price of a good increases consumers' real income making consumer more able to purchase goods

normal goods- the quantity demanded increases
Term
Demand Curve
Definition
a curve showing the relation between the price if a good and the quantity demanded during a given period
Term
Quantity Demanded
Definition
the amount demanded at a particular price, as reflected by a point on a given demand cure
Term
Market Demand
Definition
sum of the individual demands of all consumers in the market
Term
Normal Good
Definition
a good for which demand increases, or shifts rightward, as consume income rises

Ex: new clothes, name brand products, food, new car
Term
inferior Good
Definition
a good which demand decreases, shifts leftward, as consumer incomes rises

Ex: used clothes, used cars
Term
Substitutes
Definition
related in a way that an increase in the price of one shifts the demand for the other rightward
Term
Complements
Definition
related in a way that an increase in the price of one shifts the demand for the other leftward

Ex: milk and cookies
Term
Tastes
Definition
consumer preferences

likes and dislikes in consumption

assumed to be constant along a given demand curve
Term
Movement Along a Demand Curve
Definition
change in quantity demanded resuting from a change in the price of the good

static- "D"
Term
Shifts of a Demand Cuve
Definition
movement of a demand curve right or let resulting from a change in one of the determinants of demand other than the price of the good

adds a new curve (line) to the graph- D'
Term
Supply
Definition
relationship between the price of a good and the quantity that producers are willing and able to sell during a given period
Term
Law of Supply
Definition
quantity of a good supplied during a given period is usually directly to its price
Term
Supply Curve
Definition
a curve showing the relation between the price of a good and the quantity supplied during a given period
Term
Quantity Supplied
Definition
amount offered for a sale at a particular price, as reflected by a point on a given supply curve
Term
Individual Supply
Definition
the supply of an individual producer
Term
Market Supply
Definition
the sum of individual supplies of all producers in the market
Term
Relevant Resources
Definition
resources used to produce the good in questions
Term
Alternative Goods
Definition
other goods that use some or all of the same resources as the good in question
Term
Movement Along a Supply Curve
Definition
change in quantity supplied resulting from a change in the price of the good- static
Term
Shift of a Supply Curve
Definition
movement along a supply curve, left or right resulting from a change in one of the determinants of supply other than the price of the good
Term
Transactions Cost
Definition
costs of time and information required to carry out market exchange

Ex: Chicago World Trade, Agriculture
Term
Surplus
Definition
at a given price, the amount by which quantity supplied exceeds quantity demanded

usually forces the price down
Term
Shortage
Definition
forces prices upward

at a given price, the amount by which quantity demanded exceeds quantity demaded
Term
Equilibrium
Definition
condition that exists in a market when the plans of buyers match those of sellers

quantity demanded=quantity supplied=market clears
Term
Disequilobrium
Definition
condition that exists in a market when the plans of buyers do not match those of sellers

temporary mismatch between quantity supplied and quantity demanded as the market seeks equilibrium
Supporting users have an ad free experience!