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| describes the process when a govt. tells seller the MAX. they are allowed to charge consumers. price ceilings are almost always LOWER than what the equilibrium price should be. |
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| describes the process when govts. tells sellers the MIN. they are allowed to pay for input. price floors are almost always HIGHER than what the equilibrium price should be. |
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| is the MAX. price @ which a potential buyer would buy a good or service. |
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Term
| individual consumer surplus |
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Definition
| is the net gain a buyer achieves from producing a good or service. |
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| is the sum of the individual consumer of all buyers of a good or service. |
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| is a term used by economists to refer to both individual consumer surplus & total consumer surplus. |
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| is the LOWEST price @ which a seller is willing to sell a good. |
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| is the study of economics @ the level both of individuals & of society as a whole- the choices that are made. |
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| is an economy in which decisions about production and consumption are made by individual producers and consumers. |
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| refers to the way in which the indvidual pursuit of self-interst can lead to good results for the society as a whole. |
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| is the branch of economic studies that studies how people make decisions & how these decisions interact |
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| is the opposite of invisible hand; it refers to when individual pursuit of self-interest can lead to bad results for society as a whole. |
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are a downturns in the economy technically defined as 2 consec. quarters w/ decreasing G(ross)
D(omestic)P(roduct). |
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| is the branch of economics that is concerned w/overall ups & downs in the economy. |
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| the growing ability of the economy to produce goods & services. |
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Term
| 4 principles that underlie the economics of individual choice |
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Definition
| 1)resources are scarce 2)opportunity cost 3)how much? 4)people usually exploit opportunities to make themselves better off. as a result people respond to incentives. |
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| is anything that offers rewards to people who change their behavior. |
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| the real cost of something is how much you must be willing to give up. |
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| a decission made @ the margin. |
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| is the study of marginal decisions. |
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| this means my choices affect your choices & vice versa. |
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Term
| 5 principles of interaction |
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Definition
| 1)there are gains to be made from trade 2)market moves toward equilibrium 3)resources should be used as effeciently as possible to achieve cociety's goals 4)markets usually lead to efficiency 5)when markets don't achieve efficency, govt intervention can improve society's welfare. |
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| is the process in which people select diff. occupations and each person provide goods or services that other people want in exchange for diff goods and services in return. |
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| the process of each person selecting a diff. occupation. |
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| when no individul would be better off doing something different |
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| means that everyone gets a fair share. |
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Definition
| is any simplifieed representation of reality that is used to better understand real-life situations. |
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