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Definition
| a tax imposed by a government on imports |
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| goods and services bought domestically but produced in other countries |
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| goods and services produced domestically but sold in other countries |
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| the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors |
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| the highest-valued alternative that must be given up to engage in any activity |
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| a situation in which a country does not trade with other countries |
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| the ratio at which a country can trade its exports for imports for other imports from other countries |
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| reductions in a firm's costs that result from an increase in the size of an industry |
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Term
| we do not see complete specialization in the real world for three main reasons.. |
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Definition
1. not all goods and services are traded internationally
2. Production of most goods involves increasing opportunity costs
3. Tastes for products differ |
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| where does comparative advantage come from? |
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Definition
1. Climate and natural resources
2. relative abundance of labor and capital
3. Technology
4. External economies |
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Definition
| trade between countries that is without government restrictions. |
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| a numerical limit imposed by a government on the quantity of a good that can be imported into the country |
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Term
voluntary export restraint
(VER)
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Definition
| an agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from the other country |
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Term
World Trade organization
(WTO) |
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Definition
| an international organization that oversees international trade agreements |
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Term
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Definition
| the process of countries becoming more open to foreign trade and investment |
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Term
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Definition
the use of trade barriers to shield domestic firms from foreign competition.
**causes losses to consumers and eliminates jobs in the domestic industries that buy the protected product. And, by reducing the ability of countries to produce according to comparative advantage, protectionism reduces incomes. |
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Term
| protectionism is usually justified on the basis of one of the following arguments... |
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Definition
1. Saving jobs
2. Protecting high wages
3. Protecting infant industries
4. Protecting national security |
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Definition
| selling a product for a price below its cost of production. |
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Definition
| the enjoyment or satisfaction people receive from consuming goods and services. |
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Term
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Definition
| the change in total utility a person receives from consuming one additional unit of a good or service |
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Term
| law of diminishing marginal utility |
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Definition
| the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time. |
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Term
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Definition
| the limited amount of income available to consumers to spend on goods and services |
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Term
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Definition
| the change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding all other factors constant |
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Term
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Definition
| the change in the quantity demanded of a good that results from a change in price making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. |
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Term
Price decrease
>income effect
>Substitution effect |
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Definition
increases the consumer's purchasing power which...
>causes the quantity demanded to increase, if a normal good. Causes the quantity demanded to decrease, if an inferior good.
>lowers the opportunity cost of consuming the good, which causes the quantity of the good demanded to increases. |
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Definition
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Price increase
>income effect
>substitution effect |
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Definition
decreases the consumer's purchasing power which..
>causes the quantity demanded to decrease if normal good. Causes the quantity demanded to increase if inferior good.
>raises the opportunity cost of consuming the good, which causes the quantity of the good demanded to decrease. |
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Term
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Definition
| a situation in which the usefulness of a product increases with the number of consumers who use it |
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Term
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Definition
| the study of the situations in which ppl make choices that do not appear to be economically rational |
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Term
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Definition
| the tendency of ppl to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it. |
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Definition
| a cost that has already been paid and cannot be recovered |
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Term
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Definition
| the processes a firm used to turn inputs into outputs of goods and services |
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Term
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Definition
| a change in the ability of a firm to produce a given level of output with a given quality of inputs |
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Definition
| the period of time during which a least on of a firm's inputs is fixed |
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Term
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Definition
| the period of time in which a firm can vary all its inputs, adopt new technology, and increase or decrease the size of its physical plant |
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Definition
| the cost of all the inputs a firm uses in production |
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Term
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Definition
| costs that change as outputs change |
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Term
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Definition
| costs that remain constant as output changes |
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Term
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Definition
| the relationship bt the inputs employed by a firm and the maximum output it can produce with those inputs |
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Term
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Definition
| the total cost divided by the quantity of output produced |
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Term
| marginal product of labor |
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Definition
| the additional output a firm produces as a result of hiring one more worker. |
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Term
| law of diminishing returns |
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Definition
| the principle that at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to decline |
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Term
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Definition
the total output produced by a firm divided by the quantity of workers
**is the average of the marginal products of labor. |
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Term
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Definition
| the change in a firm's total cost from producing one more unit of a good or service |
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Term
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Definition
| fixed cost divided by the quantity of output produced |
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Term
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Definition
| variable cost divided by the quantity of output produced |
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Term
| long-run average cost curve |
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Definition
| a curve showing the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed |
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Term
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Definition
| the situation when a firms long-run average costs fall as it increase output |
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Term
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Definition
| the situation when a firm's long-run average costs remain unchanged as it increases output |
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Term
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Definition
| the level of output at which all economies of scale are exhausted |
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Term
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Definition
| the situation when a firms long-run average costs rise as the firm increases output |
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