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| 169156382 | Economics | the study of how people. firms, and societies use their scarce productive resources to best satisfy their unlimited material wants | 0 | |
| 169156383 | Resources | called factors of production, these are commonly grouped into the four categories of land, labor, capital, and entrepreneurship | 1 | |
| 169156384 | Scarcity | the imbalance between limited productive resources and unlimited human wants.Because economic resources are scarce, the goods and services a society can produce are also scarce | 2 | |
| 169156385 | Trade-offs | scarce resources imply that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs | 3 | |
| 169156386 | Opportunity cost | the value of the sacrifice made to pursue a course of action | 4 | |
| 169156387 | Marginal | the next unit or increment of an action | 5 | |
| 169156388 | Marginal benefit (MB) | the additional benefit received from the consumption of the unit of a good or service | 6 | |
| 169156389 | Marginal Cost (MC) | the additional cost incurred from the consumption of the next unit of a good or service | 7 | |
| 169156390 | Marginal analysis | making decisions based upon weighing the marginal benefits and costs of that action. The rational decision maker chooses an action if MB is greater than or equal to MC | 8 | |
| 169156391 | Production possibilities | different quantities of goods that an economy can produce with a given amount of scarce resources. Graphically, the trade-off between the production of two goods is portrayed as a PPC | 9 | |
| 169156392 | Law of increasing costs | the more of a good that is produced, the greater the opportunity cost of producing the next unit of that good | 10 | |
| 169156393 | Absolute advantage | exists if a producer can produce more of a good than all other producers | 11 | |
| 169156394 | Comparative advantage | a producer has this if he can produce a good at a lower opportunity cost than all other producers | 12 | |
| 169156395 | Specialization | when firms focus on production of goods for which they have comparative advantage | 13 | |
| 169156396 | Productive efficiency | production of maximum outout for a given level of technology and resources. All the points on the PPC are productively efficient | 14 | |
| 169156397 | Allocative efficiency | production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB=MC of the next unit. This only occurs at one point on the PPC | 15 | |
| 169156398 | Economic growth | occurs when an economy's production possibilities increase. This can be a result of more resources, better resources, or new technology | 16 | |
| 169156399 | Market Economy (Capitalism) | an economic system based upon the fundamentals of private property, freedom, self-interest, an prices. | 17 | |
| 169082352 | Law of Demand | Holding all else equal, when the price of a good rises, consumers decrease their quantity demanded for that product | 18 | |
| 169082353 | All else equal | to predict how a change in on variable affects a second, we hold all other variables constant. This is also referred to as the "ceterus paribus" assumption. | 19 | |
| 169082354 | Absolute (or money) prices | the price of a good measured in units of currency | 20 | |
| 169082355 | Relative prices | the number of units of any other good Y that must be sacrificed to acquire the first good X. Only relative prices matter | 21 | |
| 169082356 | Substitution Effect | the change in quantity demanded resulting from a change in the price of one good relative to the price of other goods. | 22 | |
| 169082357 | Income effect | the change in quantity demanded that results from a change in the consumer's purchasing power (or real income) | 23 | |
| 169082358 | Demand schedule | a table showing quantity demanded for a good at various prices | 24 | |
| 169082359 | Demand curve | a graphical depiction of a demand schedule. The demand curve is downward sloping, reflecting the Law of Demand | 25 | |
| 169082360 | Determinants of demand | consumer income, price of substitute good, price of complementary good, tastes and preferences, expectations, number of buyers | 26 | |
| 169082361 | Normal goods | a good for which higher income increases demand | 27 | |
| 169082362 | Inferior goods | a good for which higher income decreases demand | 28 | |
| 169082363 | Substitute goods | two goods are these if they provide essentially the same utility to the consumer | 29 | |
| 169082364 | Complementary goods | two goods are these if they provide more utility when consumed together than when consumed separately | 30 | |
| 169082365 | Law of supply | holding all else equal, when the price of a good rises, suppliers increase their quantity supplied for that good | 31 | |
| 169082366 | Supply schedule | a table showing quantity supplied for a good at various prices | 32 | |
| 169082367 | Supply curve | a graphical depiction of the supply schedule. The supply curve is upward sloping to reflect to Law of Supply | 33 | |
| 169082368 | Determinants of Supply | cost of input, taxes and subsidies, technology, price of production of other goods, expectations, number of firms | 34 | |
| 169082369 | Market equilibrium | exists at the only price where the quantity supplied equals the quantity demanded. Or it is the only quantity where the price consumers are willing to pay is exactly the price producers are willing to accept. | 35 | |
| 169082370 | Shortage | also known as excess demand, this exists at a market price when the quantity demanded exceeds the quantity supplied. The price rises to eliminate this | 36 | |
| 169082371 | Disequilibrium | any price where quantity demanded is not equal to quantity supplied | 37 | |
| 169082372 | Surplus | also known as excess supply, this exists at a market price when the quantity supplied exceeds quantity demanded. The price falls to eliminate this | 38 | |
| 169114123 | Total welfare | the sum of consumer surplus and producer surplus. The free market equilibrium provides maximum combined gain to society | 39 | |
| 169114124 | Consumer surplus | the difference between you willingness to pay and the price you actually pay. It is the area below the demand curve and above the price | 40 | |
| 169114125 | Producer surplus | the difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price | 41 | |
| 169156400 | Elasticity | measures the sensitivity or responsiveness of a choice to a change in an external factor | 42 | |
| 169156401 | Price elasticity of demand | measures the sensitivity of consumer quantity demanded for good X when the price of good X changes | 43 | |
| 169191439 | Price elasticity formula | Ed=(%∆Qd)(%∆P) Ignore negative sign | 44 | |
| 169191441 | Price elastic demand | Ed>1 or the (%∆Qd)>(%∆P) consumers are price sensitive | 45 | |
| 169191443 | Price inelastic demand | Ed<1 or the (%∆Qd)<(%∆P) consumers are not price sensitive | 46 | |
| 169191445 | Unit elastic demand | Ed=1 meaning the (%∆Qd)=(%∆P) | 47 | |
| 169191447 | Perfectly inelastic | Ed=0 in this special case, the demand curve is vertical and there is absolutely no response to price change | 48 | |
| 169191449 | Perfectly elastic | Ed=∞ in this special case, the demand for curve is horizontal meaning consumers have and instantaneous and infinite response to price change | 49 | |
| 169191451 | Slope and elasticity | the more vertical a good's demand curve, the more inelastic the demand for that good. The more horizontal the demand curve, the more elastic. | 50 | |
| 169191453 | Determinants of elasticity | if a good has more readily available substitutes it is likely that consumers are more price elastic for that good. If a high proportion of a consumer's income is devoted to a particular good, consumers are generally more price elastic for that good. When consumers have more time to adjust to a price change, their response is usually more elastic | 51 | |
| 169191455 | Total revenue | TR=P*Qd | 52 | |
| 169191458 | Total revenue test | total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is elastic | 53 | |
| 169191460 | Elasticity and demand curves | at the midpoint of a linear demand curve, Ed=1. Above the midpoint demand is elastic and below the midpoint it is inelastic | 54 | |
| 169191462 | Income elasticity | a measure of how sensitive consumption of good X is to a chance in the consumer's income | 55 | |
| 169191464 | Income elasticity formula | Ei=(%∆Qd good X)(%∆ Income) | 56 | |
| 169191466 | Luxury | a good for which the income elasticity is greater than 1 | 57 | |
| 169191468 | Necessity | a good for which the income elasticity is above zero, but less than one | 58 | |
| 169191470 | Values of income elasticity | If Ei >0, the good is normal and a luxury. If 1>Ei>0 the good is normal and income inelastic (necessity). If Ei<0 the good is inferior | 59 | |
| 169191472 | Cross-price elasticity of demand | a measure of how sensitive consumption of good X is to a change in the price of good Y | 60 | |
| 169191474 | Cross-price elasticity formula | Exy=(%∆Qd)(%∆ price Y) | 61 | |
| 169191476 | Values of cross-price elasticity of demand | if Exy>0, goods X and Y are substitutes. If Exy<0 goods X and Y are complementary goods | 62 | |
| 169191478 | Price elasticity of supply | measures the sensitivity of quantity supplied for good X when the price of good X changes | 63 | |
| 169191480 | Price elasticity of supply formula | Es=(%∆Qs)(%∆P) | 64 | |
| 169191482 | Excise tax | a per unit tax on production results in a vertical shift in the supply curve by the amount of the tax | 65 | |
| 169191484 | Incidence of tax | the proportion of the tax paid by consumers in the form of a highest price for the taxed good is greater if demand for the good is inelastic and supply is elastic | 66 | |
| 169191486 | Dead weight loss | the lost net benefit to society caused by a movement awat from the competitive market equilibrium. Policies like excise taxes create lost welfare to society | 67 | |
| 169191488 | Subsidy | has the opposite effect of an excise tax, as it lowers the marginal cost of production, resulting in a downward vertical shift in the supply curve for good X. | 68 | |
| 169191489 | Price floor | a legal minimum price below which the product cannot be sold. If a floor is installed at some level above equilibrium price, it creates a permanent surplus | 69 | |
| 169191490 | Price ceiling | a legal maximum price above which the product cannot be sold. If a ceiling is installed at a level below the equilibrium price,, it creates a permanent shortage | 70 | |
| 169191491 | Utility | happiness, benefit, satisfaction, or enjoyment gained from consumption | 71 | |
| 169191492 | Total utility | total happiness received from consumption of a number of units of a good | 72 | |
| 169191493 | Marginal utility | the incremental happiness received, or lost, when the consumer increases consumption of a good by one unit | 73 | |
| 169191494 | Utils | a unit of measurement often used to quantify utility a.k.a "happy points" | 74 | |
| 169191495 | Law of diminishing marginal utility | in a given time period, the marginal utility from consumption of more and more of that item falls | 75 | |
| 169191496 | Constrained utility maximization | for a one-good case. Constrained by prices and income, a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received | 76 | |
| 169191497 | Utility maximizing rul | the consumer maximizes utility when they choose amounts of goods X and Y, with their limited income, so that the marginal utility per dollar spend is equal for both goods. MUx/Px=MUy/Py | 77 | |
| 169191498 | Horizontal summation | the process of adding, at each price, the individual quantities demanded to find the market demand curve for a good | 78 |
