# Shared Flashcard Set

## Details

Macro Chapters 1-4
Vocab
48
Economics
02/04/2010

Term
 Competitive Markets
Definition
 Markets in which no buyer or seller has significant influence over the price at which the product sells.
Term
 Demand
Definition
 The relationship between the quantity of an item demanded per period and the price of that item. Or the relationship between an item and the willingness to pay for that item.
Term
 Ceteris Paribus
Definition
 The other things being equal assumption (holding factors constant to experiment with only one variable).
Term
 Demand Schedule
Definition
 A table showing the quantity of a good consumers are willing to buy over a period at different prices.
Term
 Law of Demand
Definition
 There is an inverse relationship between the quantity demanded and its price.
Term
 Substitutes
Definition
 If the price of one good goes up, the other good's demand goes up.
Term
 Complements
Definition
 Two goods related so that the demand of one good goes down, if the other good's price goes up.
Term
 Demand Equation
Definition
 Qdx= Q(PINTE) P=Price I=Income N=Number of buyers T=Tastes/preferences E=Expectations for future prices.
Term
 Demand Curve
Definition
 A representation of a demand schedule.
Term
 Marginal Willingness to Pay Curve
Definition
 The maximum any person is willing to pay for each successive unit.
Term
 Change in Demand
Definition
 A shift of a good's demand curve due to any factor.
Term
 Normal Good
Definition
 A good whose demand changes in the same direction as income.
Term
 Inferior Good
Definition
 A good whose demanded changes in the opposite direction from the income.
Term
 Supply
Definition
 The relationship between the quantity of an item supplied per period the price of that item.
Term
 Supply Schedule
Definition
 A table showing the quantity of a good sellers are willing to sell over a period at each of several prices.
Term
 Tendency of Supply
Definition
 Typically, but not always, sellers will offer to sell more only at a higher price.
Term
 Marginal Willingness to Accept
Definition
 The minimum compensation necessary to get a person to supply an extra unit.
Term
 Supply Curve
Definition
 A representation of a supply schedule graphically.
Term
 Changes in Supply
Definition
 Shifts in a supply curve caused by changes in any factor affecting supply other than a change in the price of the item being supplied.
Term
 Changes in Quantity Supplied
Definition
 Movement along a supply curve caused only by changes in the price of the item being supplied.
Term
 Supply Equation
Definition
 Qsx=Q(PENT) Equation that demonstrates the relationship between quantity supplied of a good and all hypothesized determinants of that good.
Term
 Equilibrium Price
Definition
 The price at which quantity demanded equals quantity supplied. It is the market clearing price.
Term
 Excess Supply (Surplus)
Definition
 More supplied than wanted
Term
 Excess Demand (Shortage)
Definition
 Amount demanded is less than what is supplied.
Term
 Price Ceiling
Definition
 A legally binding maximum price.
Term
 Price Floor
Definition
 A legally binding minimum price.
Term
 Closed Economy
Definition
 An economy that doesn't trade with others.
Term
 Factor Markets
Definition
 Markets that the supply and demand for factors of production interact to determine wages and other factor prices.
Term
 Product Markets
Definition
 Markets that the flows of goods and services are established and in which the prices of goods and services are determined.
Term
 Functional Distribution of Income
Definition
 Shows how factors of production derives income according to its economic functions.
Term
 Lorenz Curve
Definition
 The difference between the actual distribution of income and a perfectly proportional distribution.
Term
 Sole Proprietorship
Definition
 A business firm by one individual who has full responsibility of it.
Term
 Partnership
Definition
 2 or more come together to operate an enterprise.
Term
 Corporations
Definition
 Business firms whose existence and function is apart from that of their owners.
Term
 Limited Liability
Definition
 The fact that individual owners are responsible only for the value of their share purchased and not other debts.
Term
 Bonds
Definition
 Debt instruments issued by corporations.
Term
 Preferred Stock
Definition
 Stock issued by a corporation that has no voting rights
Term
 Common Stock
Definition
 Stock issued by a corporation that has voting rights.
Term
 Double Taxation
Definition
 Corporation pays taxes on its gross earnings, and shareholders pay taxes again when corporate earnings are distributed.
Term
 Multinational Corporations
Definition
 Corporations that work in many countries.
Term
Definition
 Argument that tax payments should be commensurate with the benefits received from gov services.
Term
 Ability-to-Pay Principle
Definition
 The argument that as peoples' income increases, they can afford to pay a larger part of their incomes in taxes.
Term
 Tax Rate
Definition
 Percentage of income paid in taxes.
Term
 Progressive Tax
Definition
 Tax in which the rate increases as income increases.
Term
 Regressive Tax
Definition
 Tax in which the rate decreases as income increases.
Term
 Proportional tax
Definition
 A Tax in which the rate remains constant as income increases.
Term
 Open Economy
Definition
 Activities in both foreign and domestic areas.
Term
 Invisible Hand
Definition
 Idea that a market system benefits society when individuals act in their self-interest.
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