Scarcity

Occurs when the amount
people desire exceeds the
amount available at a zero
price

(chapter 1)

Circle Flow Model

[image]

(Chapter 1)

The study of the economic
behavior in particular
markets, such as that for
computers or unskilled labor

(chapter 1)

The study of the economic
behavior of entire economies

(chapter 1)

The incorrect belief that what
is true for the individual, or
part, must necessarily be true
for the group, or the whole
(chapter 1)

The value of the best
alternative forgone when an
item or activity is chosen

(chapter 2)

A cost that has already been
incurred cannot be recovered,
and thus is irrelevant for
present and future economic
decisions.

(Chapter 2)

The individual, firm, region, or
country with the lowest
opportunity cost of produc-
ing a particular good should
specialize in that good

(Chapter 2)

The ability to make some-
thing using fewer resources
than other producers use.

(Chapter 2)

The ability to make some-
thing at a lower opportunity
cost than other producers
face.

(Chapter 2)

Focusing work effort on a
particular product or a single
task

(Chapter 2)

The condition that exists
when there is no way
resources can be reallocated
to increase the production of
one good without decreasing
the production of another;
getting the most from
available resources

(Chapter 2)

To produce more of one
good, a successively larger
amount of the other good
must be sacrificed

(Chapter 2)

An increase in the economy's
ability to produce goods and
services; reflected by an
outward shift of the economy's

 production possibilities
frontier

(Chapter 2)

An economic system
characterized by the private
ownership of resources and
the use of prices to coordi-
nate economic activity in
unregulated markets

(Chapter 2)

An economic system
characterized by the public
ownership of resources and
centralized planning

(Chapter 2)

An economic system
characterized by the private
ownership of some resources
and the public ownership of
other resources; some
markets are regulated by
government

(Chapter 2)

The satisfaction received
from consumption; sense of
well-being

(chapter 3)

Cash or in-kind benefits given
to individuals as outright
grants from the government

(Chapter 3)

A firm with a single owner
who has the right to all profits
but who also bears unlimited
liability for the firm's losses
and debts

(Chapter 3)

An organization consisting
of people who pool their
resources to buy and sell
more efficiently than they
could individually

(Chapter 3)

Groups that do not pursue
profit as a goal; they engage
in charitable, educational,
humanitarian, cultural,
professional, or other
activities, often with a
social purpose

(Chapter 3)

Technological change
spawned by the microchip
and the Internet that
enhanced the acquisition,
analysis, and transmission of
information

(Chapter 3)

A condition that arises when
the unregulated operation of
markets yields socially
undesirable results

(Chapter 3)

A cost or a benefit that affects
neither the buyer nor seller,
but instead affects people not
involved in the market
transaction

(Chapter 3)

The use of government
purchases, transfer payments,
taxes, and borrowing to
influence economy-wide
variables such as inflation,
employment, and economic
growth

(Chapter 3)

Regulation of the money
supply to influence economy-
wide variables such as
inflation, employment, and
economic growth

(Chapter 3)

The distribution of tax burden
among taxpayers; who
ultimately pays the tax

(Chapter 3)

The tax as a percentage of
income decreases as income
increases

(Chapter 3)

Balance of payments

The quantity of a good that
consumers are willing and
able to buy per period relates
inversely, or negatively, to the
price, other things constant

(Chapter 4)

When the price of a good falls,
that good becomes cheaper
compared to other goods so
consumers tend to substitute
that good for other goods

(Chapter 4)

The number of dollars a
person receives per period

(Chapter 4)

A fall in the price of a good
increases consumers’ real
income, making consumers
more able to purchase goods;
for a normal good, the
quantity demanded increases

(Chapter 4)

The amount of a good
consumers are willing and
able to buy per period at a
particular price, as reflected
by a point on a demand curve

(Chapter 4)

Goods, such as Coke and
Pepsi, that relate in such a
way that an increase in the
price of one shifts the
demand for the other
rightward

(Chapter 4)

Goods, such as milk and
cookies, that relate in such a
way that an increase in the
price of one shifts the demand
for the other leftward

(Chapter 4)

Consumer preferences; likes
and dislikes in consumption;
assumed to remain constant
along a given demand curve

(Chapter 4)

The amount of a good that
producers are willing and able
to sell per period is usually
directly related to its price,
other things constant

(Chapter 4)

The relation between the
price of a good and the
quantity all producers are
willing and able to sell per
period, other things constant

(Chapter 4)

Other goods that use some or
all of the same resources as
the good in question

(Chapter 4)

The costs of time and
information required to
carry out market exchange

(Chapter 4)

At a given price, the amount
by which quantity supplied
exceeds quantity demanded;
a surplus usually forces the
price down

(Chapter 4)

The condition that exists in a
market when the plans of
buyers match those of sellers,
so quantity demanded equals
quantity supplied and the
market clears

(Chapter 4)

A minimum legal price below
which a product cannot be
sold; to have an impact, a
price floor must be set above
the equilibrium price

(Chapter 4)

A maximum legal price above
which a product cannot be
sold; to have an impact, a
price ceiling must be set
below the equilibrium price

(Chapter 4)

Percentage change in quantity demanded
____________________________________
  
Percentage change in price

(Chapter 5)

Price multiplied by the
quantity demanded at that
price

(chapter 5)

A straight-line demand curve;
such a demand curve has a
constant slope but usually has
a varying price elasticity

(Chapter five)

A horizontal line reflecting a
situation in which any price
increase would reduce
quantity demanded to zero;
the elasticity has an absolute
value of infinity

(chapter 5)