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Details Title: Microeconomics Description: Wright, Spring 2007 Total Flash Cards: 33 Created: 02/24/2007 10:06:55	To study from this set of flash cards, or to create your own your own study flash cards, register HERE. If you are already a registered user, CLICK HERE.
Cards Term Scarcity Definition Other purposes Term Resources Definition Factors of production (a.k.a. inputs) Term The econmizing problem Definition People have more or less unlimites wants, but the resources that are available are limites Term Land Definition All natural or non-human resources: air, mineral deposites, oil, etc. Term Labour Definition Physical and mental capabilities to work Term Capital Definition A manufactured good that is used to produce something else; a produced means of further production: i.e. machines, buildings, office furniture, lumber (not timber) Term Entrepreneurship Definition A person who makes the decisions Term Demand Definition The relationship between the price of an item and the amount of it that people will buy Term Law Of Demand Definition The quantity demanded of an item varies inversely with its price, other things equal Term Why Is The Demand Curve Downward Sloping? Definition 1. When the price of something goes down, people can afford to buy more of it (ability to buy) 2. When price falls, people may buy more because it is a bargain relative to what else they could buy (willingness to buy) Term Price of Substitutes Definition Two or more goods which are interchangable (ex. butter and margarine) Term Price of Complements Definition Teo or more goods which are used together (ex: peanut butter and jelly) Term Expectations Definition What people think MIGHT happen in the future can influence how they buy TODAY Term Nonmonetary Factors Definition Everything else: a. age e. religion b. gender f. education c. race g. occupation d. taste h. fashion/ trends etc. Term Change in Quantity Demanded Definition Movement along a demand curve, which occurs because price has changed Term Change in Demand Definition The whole curve is shifted because something else (income, price of substitutes, price of compliments, expectations, non-monetary factors) changes Term Supply Definition The relationship between the price of an item and the amount of it that producers/sellers are willing to sell Term Retaining the Market Mechanism Definition Price Ceilings: a legal maximum that is set below the equalibrium Term Elasticity Definition A measure of responsiveness Term Price Elasticity Definition The percentage change in quantity (demanded or supplied) resulting from a one percent change in price E= percentage change in quantity/ percentage change in price Term Perfectly Elastic Definition E= infinity Term Elastic Definition E is greater than one (Change in quantity> change in price) Term Unit Elastic Definition E=1 Change in quantity= Change in price Term Inelastic Definition 0 Term Perfectly Inelastic Definition E=0 E= % change in quantity/ % change in price Term Determinants of Elasticity (4) Definition 1.Substitutes 2. Inexpresiveness 3. Time 4. Luxury vs. Necessity Good Term Rule #1 Definition When the average curve is rising, the marginal curve is above it Term Rule #2 Definition When the average curve is falling, the marginal curve is below it Term Rule #3 Definition When the average curve is NEITHER rising nor falling (at a maximum or minimum) marginal equals average Ex: baseball, basketball averages Term Rule #4 Definition When the total curve is increading at an increasing rate, the marginal curve is rising Term Rule #5 Definition When the total curve is increasing at a decreasing rate, the marginal curve is falling Term Rule #6 Definition When the total curve is falling, the marginal curve is negative Term The 3 Advantages of Being a Bigger Company Definition 1. Greater specialization of resources 2. More efficient utilization of equipment 3. Reduced unit cost of inputs (volume discount idea)