Term
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Definition
| The economic observation that humans have unlimted wants but only limited resources |
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Definition
| The study of how society manages its scarce resources |
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Term
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Definition
| The stuyd of how individual consumers, households and firms make decisions and behave in a market |
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Term
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Definition
| The study of economy-wide phenoma, includes inflation, unemployment and economic growth |
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Term
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Definition
| Attempts to describe the word as it is |
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Term
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Definition
| Claim that attempts to prescribe how world should be |
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Definition
| Set of institution arrangements to determine how o distribute that scarce resources to satisfy peoples wants |
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Term
| Econimc System Answers 5 Questions |
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Definition
What goods and services will be produced?
How will the goods and services be produced?
Who will get the goods and services?
How will the system accommodate change?
How will the system accomodate progress? |
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Term
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Definition
| Government owns most of the resources and a central plannin board decides how the resources will be used |
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Term
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Definition
| Resources privately owned, goods are privately produced according to a profit motive |
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Term
| 6 Characteristics of Market System |
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Definition
Extensive Private Property
Freedom of enterprise and choice
Self interest as main motivating force
Competition
Market and Prices exist
Active but limited government |
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Term
| 2 Problems with command system |
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Definition
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Term
| Assumptions about consumers |
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Definition
People are rational
People have unlimited wants
People have limited income |
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Term
| Rational (for asumptions about consumers) |
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Definition
| People know what they want and how to get it, they obtain it if the benefits exceed the cost given their information |
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Term
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Definition
| All other things equal, when the price of a good goes up the demand goes down |
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Term
| Reasons for shift in Demand |
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Definition
Change in income
Price of related goods
Number of buyers
Taste/Preferences
Expectations |
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Term
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Definition
Firms act to maximize profits
Firms produce goods using technology that requires resources
Resources are limited |
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Term
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Definition
| All other things equal, as the price of a good increases the suplly increases |
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Term
| Reasons for shift in supply (4) |
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Definition
Input prices
Technology
Taste/preferences
Number of sellers |
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Term
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Definition
| Created when a group of buyers and sellers of a particular good come together and trade |
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Term
| Pefectly Competitive Market |
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Definition
| Market where there are many buyers and sellers so that each person has a negligable impact on market price |
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Term
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Definition
| A competitive equalibrium is a price and a quantity such that quantity demanded=quantity supplied |
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Term
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Definition
| Measure of how much buyers and sellers respond to changes in market conditions |
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Term
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Definition
| Measure of how much buyers and sellers respond to change in price |
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Term
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Definition
| Measure of how much buyers and sellers demand changes in response to a change in income |
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Term
| Elastic (Graph price changes) |
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Definition
| Quantity respons "substantially" to changes in price |
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Term
| Inelastic (Graph change in price) |
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Definition
| Quantity responds "slightly" to changes in price |
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Term
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Definition
(Q2-Q1)*(P2+P1)
divided by
(Q2+Q1)*(P2-P1) |
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Term
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Definition
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Term
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Definition
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Term
| Why are things "elastic" or "inelastic"? |
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Definition
Availability of close substitiutes
Necessity vs Luxury
Definition of "Market"
Time Horizon |
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Term
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Definition
| The study of how the allocation of resources affect economic well-being |
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Term
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Definition
| Resource allocation that distributes economic prosperity uniformly amongst members |
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Term
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Definition
| Difference between the price that the consumer pay and they price they're willing to pay |
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Term
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Definition
| The property of a resource allocation of maximizing the total surplus received by all members of society |
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Term
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Definition
| Difference between the price that the producers pay and the price they are willing to pay |
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Term
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Definition
| Market value of final goods and services produced in a certain country within a given time |
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Term
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Definition
| Revenue firms recieve from selling their products at the price the buyer and seller agree on |
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Term
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Definition
| A good used entirely to produce another good |
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Term
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Definition
| Any good that is not an intermediate good |
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Term
| Goods NOT included in GDP |
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Definition
Intermediate
Land or investments of goods
Used goods
Informal production/home production |
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Term
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Definition
| GDP calculated using current market prices in a base year |
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Term
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Definition
| GDP calculated using market prices in a base year |
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Term
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Definition
Nominal GDP
divided by
Realy GDP
x100 |
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Term
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Definition
GDP Deflator in year 2 - GDP Deflator in year 1
divided by
GDP Deflator in year 1 |
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Term
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Definition
| Increase in real GDP per capita over time |
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Term
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Definition
Real GDP
divided by
Population |
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Term
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Definition
| How quickly a country is growing |
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Term
| Rate of Economic Growth (equation) |
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Definition
RGDP PC new - RGDP PC old
divided by
RGDP PC old |
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Term
| How does GDP relate to quality of life? |
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Definition
| Posivite correlation with high GDP, Negative with corruption; High GDP=Low corruption |
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Term
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Definition
| Economic growth characterized by sustained and ongoing increas in RGDP PC |
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Term
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Definition
Increase in quantity/quality of life
Increase in human capital per worker
Increase in capital goods per worker |
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Term
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Definition
Improve technology
Increase productive efficiency
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Term
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Definition
| Increase demand of goods/services |
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Term
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Definition
Number of Machines
divided by
Number of Workers |
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Term
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Definition
Number produced
divided by
Number of workers x hours worked |
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Term
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Definition
Increases efficiency
Increases demand for goods
Increases foriegn investment |
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Term
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Definition
Increases innovation
Increases monopolies
Decreases output |
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Term
High Population Growth leads to...
High RGDP Growth leads to... |
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Definition
Low RGDP growth
Low Population growth |
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Term
| Demographic Transition Theory |
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Definition
| Rising incomes lead to slower population growth |
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Term
| Growth Not Sustainable (1) |
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Definition
| Modern growth has resulted from new ideas |
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Term
| Growth is Sustainable (2) |
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Definition
Resource prices aren't rising
Growth has a lot to do with expansion and apllication of knowledge and information |
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Term
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Definition
Growth causes pollution, global warming
"More" is not better if it means alienation, burnouts, deadend jobs
High growth causes high-stress |
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Term
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Definition
Leads to improved standard of living
Improved working conditions, decreases alienation
Allows more sustainability to environmental concerns |
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Term
| Governments role Regulator |
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Definition
Promote stability
Provide legal structure
Maintain competition |
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Term
| Government role Equalizer |
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Definition
Proved public goods and services
Redistribute income
Reallocate resources |
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Term
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Definition
| Caused by workers looking for jobs matching their skills/preferences |
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Term
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Definition
Caused by worker whose skills aren't in demand by employers
Skills aren't good enough to be hired
Can't move to where jobs are available |
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