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| The cost associated with forgoing the opportunity to employ a resource in its best alternative use. |
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| A good that when income increases, the amount demanded decreases |
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| A cost associated with production that does not vary with the amount of output; the cost can only be avoided if no good is produced |
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| The state of goods where as the price goes up, the quantity demanded increases |
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| A good for which the demand increases as income increases, and demand falls as income falls |
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| the analysis on who bears the burden of a tax. This depends on the price elasticity of both supply and demand |
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| when the elasticity of demand is between -1 and 0, or when the percentage change in the amount demanded is smaller than the percentage change in price |
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| a limiting factor on how much one can consume, whether it be time, money, or other constraint |
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| the change in the consumer's utility resulting from the addition of an amount of a good divided by the amount added (new-old/new) |
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a function that describes your preferences through what you bought plus the money left over
Utility= U(x)+M |
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| Individual vs. Markey Demand Curve |
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| one describes the relationship between the price of a good and the amount a particular consumer purchases. The other is a relationship between the price and the sum of the amount consumers purchase |
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| A graph which shows all the alternatives that a consumer likes equally well. |
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| A graph that identifies all the input combinations that produce a given amount of outputs. |
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| Shows all combinations of inputs which cost the same total amount |
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| the equation which states that the output of a firm is the function of its input factors (like labor and capital) |
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| describes the total cost of producing each possible level of output |
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| Costs that once paid, cannot be recovered. THey do not (should not) affect production decisions, exit, or entry |
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| misallocates resources by depending on information that is irrelevant to the decision being made -- i.e. thinking that the cost should factor into some decision made (feeling obligated to go to the movies once a ticket is bought) |
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| a unit free measure of the steepness of a curve. Helps to understand the change in quantity associated with a given change in price. (change in quantity/change in price) |
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| What the percentage change is in quantity supplied for a given price change (positive) |
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| Negative. Perfectly elastic _______ is demonstrated by a horizontal line. If price is higher, no one will buy. If price is lower, no one will buy |
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| A good whose demand works in conjuction with another good. Therefore, if the demand of one goes up, the demand of the other goes up. (E.g. tea and lemons, right shoes and left shoes) |
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