Term
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Definition
| Others things equal when the price of a good rises, the quantity demanded of teh good falls, and when the price falls, the quantity demanded rises |
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Term
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Definition
| claim about what the world is |
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Term
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Definition
| claim about what the world is |
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Term
Production possibility Frontier
shows |
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Definition
- can experience growth over time
- can produce below potential
- accept less of a good to recieve more of another
- have limited resouces for use in meetinfs its consumption needs
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Term
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Definition
| ability to produce a good at a lower opportunity cost than other producers |
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Term
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Definition
- most goods are scarce, but shortages are rare
- many buyers
- many sellers
- prices constantly adjust to a new equilibrium
- responsiveness to customers wants and needs
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Term
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Definition
- a way to ensure fair price for sellers
- smaller sellers can compete with undercut prices
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Term
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Definition
- employers and employees are equally affected by taxea
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Term
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Definition
| measures the quantity of demanded of one good changes the price of another |
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Term
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Definition
- discourages consumption of good
- discourages production of a good
- distorts resource allocation
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Term
| Principle 3: Rational people think at the margin |
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Definition
- water is cheap and diamonds are expensive because
- marginal benefit from an extra unit of diamond is greter than marginal benefit from extra water because water is plentiful and diamonds are rare
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Term
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Definition
| shortages and sarcity are common |
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Term
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Definition
| co-operation for the common good |
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Term
| Principle 7: Sometimes governments improve market outcomes |
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Definition
- Establish and enforce propoerty rights
- ensure disablesd people have enough income to live decently
- prevent firms from exercisng monopoly power
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Term
| Principle 10: Society faces a short run tradeoff between inflation and unemployment |
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Definition
- in the short run
- unemployment is lower
- higher demand raises prices
- inflation increases spending
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Term
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Definition
| shows interaction between producers and consumers in market economy |
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Term
| Things that influence sellers |
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Definition
- price of good: represents movement along supply
- input price, technology, expectations, number of sellers: shifts supply curve
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Term
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Definition
| excess of supply. supliers cant sell all they want at the going price |
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Term
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Definition
| excess of demand, buyers arent able to buy all they want at the going price |
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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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