Term
| What is the Production Possibility Curve? (PPF) |
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Definition
| Represents the point at which the economy is most efficiently producing its goods and services. |
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Term
| What do the points which fall on the PPF curve represent |
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Definition
| The most efficient use of resources |
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Term
| What do the points outside the PPF curve represent |
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Definition
| Unobtainable goals based on current resources |
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Term
| What do the points inside the PPF curve represent |
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Definition
| Inefficient use of resources. |
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Term
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Definition
| Its what you give up in making a decision |
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Term
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Definition
| Idea that people make decisions by weighing rational information |
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Term
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Definition
| What we are trying to get the most of |
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Term
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Definition
| The Goods or services people seek when income level increases i.e. Luxury cars, as a persons income increases more people buy or demand luxury cars. When it Goes Up you Buy More |
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Term
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Definition
| The goods or services people seek less of as income levels increase i.e. Public Transportation, as a persons income increases the more likely they are to spend on private forms of transportation. When it goes up you buy Less |
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Term
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Definition
| A substitute for a product that people will buy more or less of depending on the price of the product its replacing. i.e. margarine being a substitute for butter, if butter becomes more expensive more people will buy margarine. |
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Term
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Definition
| A good or service used in conjunction with another product. i.e. French Fries and ketchup…If the cost of French fries were to go up, the demand for ketchup would decrease because it is not something desired by itself. |
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Term
| What is the Law Of Supply |
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Definition
| As the price of a good increases, suppliers will attempt to maximize profits by increasing the quantity of the product sold. |
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Term
| What is the Law of Demand |
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Definition
| as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa. |
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Term
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Definition
| Shows the relationship between price and quantity when supply changes |
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Term
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Definition
| Shows the relationship between price and quantity when demand changes. |
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Term
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Definition
| The point where supply is equal to demand |
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Term
| What does Normative mean? |
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Definition
| A statement of "what ought to be" rather than what actually is. Usually based on theories or opinions the accuracy of which cannot be proved. i.e. “We should cut taxes in half to increase disposable income levels.” |
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Term
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Definition
| The study of economics based on objective analysis. A statement which can be proved. i.e. "Increasing the interest rate will encourage people to save." |
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Term
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Definition
| "all other things being equal" i.e. when discussing the laws of supply and demand, one could say that if demand for a given product outweighs supply, ceteris paribus, prices will rise. |
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Term
| What happens when Demand Increase |
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Definition
| Price goes up Quantity Goes Up |
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Term
| What happens when Demand Decrease |
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Definition
| Price goes down Quantity Goes down |
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Term
| What happens when Supply increase |
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Definition
| Price goes down quantity goes up |
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Term
| What happens when Supply Decrease |
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Definition
| price goes up quantity goes down |
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Term
| Where is the CSV area located |
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Definition
| Draw a straight line through the points where the S curve and d curve cross. The triangle to the left of the d curve above the straight line is the CSV |
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Term
| Where is the PSV area located |
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Definition
| The area below the straight line to the left of the S curve |
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Term
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Definition
| Is the CSV area + PSV area |
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