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| limited resources and therefore cannot produce all the goods and services people wish to have |
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| study of how society manages its scarce resources |
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| property of society getting the most it can from its scarce resources |
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| those benefits are distributed uniformly among societys members |
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| whatever must be given up to otain some item |
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| people who systematically and purposefully do the best they can to achive their objectices |
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| a small incremental adjustment to a plan of action |
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| something that induces a person to act |
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| an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
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| ability of an individual to own and exercixe control over scarce resources |
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| ability of a single economic actor to have a sustantial influence on market prices |
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| productivity the quantity of goods and services produced from each unit of labor input |
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| an increase in the overall level of prices in the economy |
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| visual model of the economy that shows how dollars flow through the markets among households and firms |
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| production possiblities frontier (ppf) |
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| graph that shows the combinations of output that the economy can possibly produce fiven the available factors of production and the available production technology and resources |
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| as price increases quantity supplied increases |
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| as price increases quantity Demand decreases |
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| study of how households and firms make decisions and how they interact in markets |
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| study of economy wide phenomena including inflation unemployment and economic growth |
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| claims that attempt to describe the world as it is |
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| claims that attempt to prescribe how the world should be |
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| group of buyers and sellers of a particular good or service |
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| market in which there are many buyers and many sellers so that each has negligible impact on the market price |
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| amount of a good that buyers are willing and able to purchase |
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| other things equal the quantity demanded of a good falls when the price of the good rises |
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| table that shows the relationship between the price of a good and the quantity demanded |
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| graph of the relationship betweem the price of a good and the quantity demanded |
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| good for which other things equal an increase in income leads to an increase in demand |
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| a good for which other things equal an increase in income leads to a decrease in demand |
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| two goods for which an increase in the price of one leads in the demand for the other |
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| two goods for which increase in the price of one leads to a decrease in the demand for the other |
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| amt of a good that sellers are willing and able to sell |
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| other things equal the quantity supplied of a good rises when the price of the good rises |
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| table showing relationship btwn the price of good and quantit supplied |
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| graph of relationship btwn the price of a good and the quantity supplied |
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| input prices, technology, expectations, # of sellers |
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| price that balances quantity supplied and quantity demanded |
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| quantity supplied and quantity demanded at equlilibrum price |
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| situation when quantity supplied is greater than quantity demanded |
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| amt paid by burs and recieved by sellers of a good, computed as the price of the good times the quantity sold |
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| if quantity demanded responds only substantially to changes in price |
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| if the quantity demanded responds only slightly to changes in price |
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Term
| income elasticity of Demand |
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| measure of how much the quantity demanded of a good responds to a change in comsumers income computed as the % change in quantity demanded divided by the % change in income |
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| cross price elasticity of Demand |
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| measure of how much quantity demanded of one good responds to a change in the price of another good computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of 2nd good |
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| price elasticity of Supply |
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| measure of how much the quantity supplied of a good responds to a change in quantity supplied divided by the percentage change in price |
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| study of how the allocatino of resources affects economic well-being |
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| max amount that a buyer will pay for a good |
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| amt a buyer is willing to pay for a good minus the ant actual paid for |
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| value of everything a seller must give up to produce a good |
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| the amount a seller is paid for a good minus the sellers cost of providing it |
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| the property of a resource allocation of maximizing the total surplus received by all members of socitey |
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| the property of distributing economic prsperity uniformly amonh the members of soceity |
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| a legal maximum on the price at which a good can be sold |
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| a legal mimimum on the price at which a good can be sold |
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| the manner in which the burdern of a tac is shared among participants in a market |
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| the fall in total surplus that results from a market distortion, such as tax |
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Term
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Definition
uncompensated impact of one persons acrions on the well-being of a bystander
positive externality is when its benefical
negative externality is when the impact on the bystander is adverse |
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| internalizing the externality |
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| gives buyers and sellers in the market an incentive to take into account the external effects if their actions |
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| tax designed to induce private decision makers to take account of the social costs that arise from a negative externatlity |
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| government intervention in the economy that aims to promote technology-enhancing industries |
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| a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality |
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| the proposition that if private parties can bargain without cost over the allocation of resouces they can solve the problem of externalities on their own |
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| cost that parties incur in the process of agreeing to and following through on a bargain |
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| the property of a good whereby one person's use dimishes other people's use |
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| goods that are both excludable and rival in cosumption |
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| goods that are both excludable and rival in consumption |
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| goods that are neither exludable nor rival in consumption |
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| goods that are rival in consumption but not excludable |
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| goods that are excluable but not rival in consumption |
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| a person who receives the benefit of a good but avoids paying for it |
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| a study that compares the costs and benefits to society of providing a public good |
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| a parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole |
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