Terms : Hide Images
| 170969288 | perfectly elastic | In this special case, the demand curve is horizontal meaning consumers have an instantaneous & infinite response to a change in price | 0 | |
| 170969289 | Ed = ∞ | perfectly elastic | 1 | |
| 170969290 | public goods | goods that are both nonrival & nonexcludable | 2 | |
| 170969291 | law of supply | All else =, when the price of a good rises, the quantity supplied of that good rises | 3 | |
| 170969292 | demand curve | Shows the quantity of a good demanded at all prices | 4 | |
| 170969293 | marginal benefit | The additional benefit received from the consumption of the next unit of a good or service | 5 | |
| 170969294 | MB | marginal benefit abbreviation | 6 | |
| 170969295 | necessity | A good for which the proportional increase in consumption is less than the proportional increase in income | 7 | |
| 170969296 | game theory | An approach for modeling the strategic interactions of firms in oligopoly markets | 8 | |
| 170969297 | least-cost rule | The combination of labor & capital that minimizes total costs for a given production rate is where MPL / PL = MPK / PK | 9 | |
| 170969298 | least-cost rule | MPL / PL = MPK / PK | 10 | |
| 170969299 | progressive tax | A tax where the proportion of income paid in taxes rises as income rises | 11 | |
| 170969300 | short run | A period of time too short to change the size of the plant, but many other, more variable, resources can be adjusted to meet demand | 12 | |
| 170969301 | labor force | The sum of all individuals 16 years & older who are either currently employed (E) or unemployed (U) LF = E + U | 13 | |
| 170969302 | technology | A nation's knowledge of how to produce goods in the best possible way | 14 | |
| 170969303 | total revenue test | total revenue rises with a price increase if demand is price inelastic & falls w/ a price increase if demand is price elastic | 15 | |
| 170969304 | marginal productivity theory | the theory that a citizen's share of economic resources is proportional to the marginal revenue product of his or her labor | 16 | |
| 170969305 | economic costs | The sum of explicit & implicit costs of production | 17 | |
| 170969306 | prisoner's dilemma | A game where the 2 rivals achieve a less desirable outcome because they are unable to coordinated their strategies | 18 | |
| 170969307 | productive efficiency | production of maximum output for a given level of technology & resources | 19 | |
| 170969308 | Allocate efficiency | P=MC | 20 | |
| 170969309 | Productive efficiency | P=Minimum ATC | 21 | |
| 170969310 | total revenue | The price of a good multiplied by the quantity of the good sold | 22 | |
| 170969311 | price discrimination | The sale of the same product to different groups of consumers at different prices | 23 | |
| 170969312 | all else = | The assumption that all other variables are held constant so that we can predict how a change in one variable affects a second. Also known as the "ceteris paribus" assumption | 24 | |
| 170969313 | ceteris paribus | all else equal | 25 | |
| 170969314 | non-collusive oligopoly | Models of industries in which firms are competitive rivals seeking to gain at the expense of their rivals | 26 | |
| 170969315 | trade-offs | The reality of scarce resources implies that individuals, firms, & gov'ts are constantly faced w/ difficult choices that involve benefits & costs | 27 | |
| 170969316 | demand for labor | shows quantity of labor demanded at all wages. Labor demand for a firm hiring in a competitive labor market is MRPL | 28 | |
| 170969317 | MRPL | labor demand for a competitive firm hiring | 29 | |
| 170969318 | regressive tax | a tax where the proportion of income paid in taxes decreases as income rises | 30 | |
| 170969319 | sticky prices | THe case when price levels do not change, especially downward w/ changes in AD | 31 | |
| 170969320 | explicit costs | Direct, purchased out-of-pocket costs, paid to resource suppliers outside the firm. Also referred to as accounting costs | 32 | |
| 170969321 | price ceiling | A legal maximum price, above which the product cannot be said | 33 | |
| 170969322 | PPF | The graphical device used to show the production possibilities of two goods (use abbreviation) | 34 | |
| 170969323 | PPF | Production possibilities frontier (abbreviation) | 35 | |
| 170969324 | unit elastic demand | The %∆ in P is = to %∆ on quantity demanded | 36 | |
| 170969325 | unit elastic demand | Ed = 1 | 37 | |
| 170969326 | MRP=MRC | The firm hires a resource up to the point where MRP = MRC | 38 | |
| 170969327 | MRP | marginal resource price | 39 | |
| 170969328 | MRC | marginal resource cost | 40 | |
| 170969329 | MRP=MRC | profit maximizing resource employment | 41 | |
| 170969330 | Average Variable Cost | Total variable cost divided by output | 42 | |
| 170969331 | AVC | Average Variable Cost (abbrv.) | 43 | |
| 170969332 | determinants of demand | External factors that shift demand to the left or right | 44 | |
| 170969333 | dominant strategy | A strategy that is always the best strategy to pursue, regardless of what a rival is doing | 45 | |
| 170969334 | marginal cost | The additional cost of producing one more unit of output | 46 | |
| 170969335 | MC | marginal cost (abbrv.) | 47 | |
| 170969336 | disequilibrium | Any price where the quantity demanded doesn't = quantity supplied | 48 | |
| 170969337 | diseconomies of scale | The upward part of the long-run average total cost curve where LRAC rises as plant size rises | 49 | |
| 170969338 | excess capacity | The difference b/w the long-run output in monopolistic competition and the output at minimum ATC | 50 | |
| 170969339 | free rider | An individual who receives the benefit of a good w/o incurring any cost for the good | 51 | |
| 170969340 | market | A group w/ buyers & sellers of a good or service | 52 | |
| 170969341 | law of increasing MC | As a producer produces more of a good, the MC rises | 53 | |
| 170969342 | market power | The ability to set a price above the perfectly competitive level. Ability of a firm to influence the market | 54 | |
| 170969343 | opportunity cost | The value of the sacrifice made to pursue a course of action | 55 | |
| 170969344 | 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 | 56 | |
| 170969345 | AFC | average fixed cost | 57 | |
| 170969346 | AFC | Total fixed cost divided by output | 58 | |
| 170969347 | absolute advantage | The ability to produce more of a good than all other producers | 59 | |
| 170969348 | monopolistic competition | A market structure characterized by a few small firms producing a differentiated product w/ easy entry into the market | 60 | |
| 170969349 | economics | The study of how society allocates scare resources | 61 | |
| 170969350 | circular flow of economic activity | A model that shows how households & firms circulate resources, goods, & incomes through the economy. This basic model is expanded to include the gov't & foreign sector (or circular of goods & services) | 62 | |
| 170969351 | complementary goods | Two goods that provide more utility when consumed together than when consumed separately | 63 | |
| 170969352 | the firm | An organization that employs factors of production to produce a good or service that it hopes to profitably sell | 64 | |
| 170969353 | law of diminishing marginal utility | In a given time period, as consumption of an item increases, the marginal (additional) utility from that item falls | 65 | |
| 170969354 | long run | A period of time long enough for the firm to alter all production inputs, including the plant size | 66 | |
| 170969355 | comparative advantage | The ability to produce a good at a lower opportunity cost than all other producers | 67 | |
| 170969356 | marginal utility | THe change in an individual's total utility from the consumption of an addition unit of a good or service | 68 | |
| 170969357 | average total cost | Total cost divided by output | 69 | |
| 170969358 | ATC | average total cost | 70 | |
| 170969359 | elasticity | Measures the sensitivity or responsiveness, of a choice to a ∆ in an external factor | 71 | |
| 170969360 | positive externality | The existence of spillover benefits upon third parties from the production of a good | 72 | |
| 170969361 | producer surplus | The difference b/w the price received & the MC of producing the good | 73 | |
| 170969362 | factors of production | Commonly grouped into the four categories of labor, physical capital, land or natural resources, & entrepreneurial ability | 74 | |
| 170969363 | surplus | The difference b/w quantity supplied & quantity demanded. | 75 | |
| 170969364 | normal profit | The opportunity cost of the entrepreneur's talents. Another way of saying the firm is earning zero economic profit | 76 | |
| 170969365 | normal profit | profit when firm is earning 0 economic profit | 77 | |
| 170969366 | shortage | The difference b/w quantity demanded & quantity supplied | 78 | |
| 170969367 | excise tax | A per unit tax on a specific good or service | 79 | |
| 170969368 | human capital | The amount of knowledge & skills that labor can apply to the work that they do | 80 | |
| 170969369 | market failure | The inability of the free market to allocate resources efficiently | 81 | |
| 170969370 | production possibilities curve | A graphical device that shows the combination of 2 goods that a nation can efficiently produce w/ available resources & technology | 82 | |
| 170969371 | price floor | A legal minimum price, below which the product cannot be sold | 83 | |
| 170969372 | constrained utility maximization | given prices & income, a consumer stops consuming a good when the P paid for the next unit is = to the marginal utility received | 84 | |
| 170969373 | spillover benefits | Additional benefits to society, not captured by the market demand curve from the production of a good | 85 | |
| 170969374 | spillover costs | Additional costs to society, not captured by the market supply curve from the production of a good | 86 | |
| 170969375 | substitute goods | 2 goods are consumer substitutes if they provide essentially the same utility to the consumer | 87 | |
| 170969376 | specialization | Production of goods, or performance of tasks, based upon comparative advantage | 88 | |
| 170969377 | marginal analysis | Making decisions based upon weighing the marginal benefits & costs of that action. The rational decision-maker chooses an action if the MB ≥ MC | 89 | |
| 170969378 | substitution effect | The ∆ in quantity demanded resulting from a ∆ in P of one good relative to the price of other goods | 90 | |
| 170969379 | supply schedule | A table showing quantity supplied for a good at various prices | 91 | |
| 170969380 | surplus | A situation in which, at the going market price, the quantity supplied exceeds the quantity demanded | 92 | |
| 170969381 | perfectly inelastic | In this special case, the demand curve is vertical & there is absolutely no response to a ∆ in P | 93 | |
| 170969382 | perfectly inelastic | Ed = 0 | 94 | |
| 170969383 | Price elasticity of supply | Measures the sensitivity of producers' quantity supplied for good X when the price of good X changes | 95 | |
| 170969384 | Es | price elasticity of supply abbv. | 96 | |
| 170969385 | Total Cost | the sum of total fixed & total variable costs at any level of output | 97 | |
| 170969386 | TC | total cost | 98 | |
| 170969387 | income effect | due to a higher price, the ∆ in quantity demanded that results from a ∆ in the consumer's purchasing power | 99 | |
| 170969388 | real income | consumer's purchasing power | 100 | |
| 170969389 | Total fixed costs | Production costs that do not vary w/ the level of output | 101 | |
| 170969390 | TFC | Total fixed costs | 102 | |
| 170969391 | determinants of supply | The external factors that influence supply. When these variables ∆, the entire supply curve shifts to the left or right | 103 | |
| 170969392 | expected rate of return | The rate of profit the firm anticipates receiving on investment expenditures | 104 | |
| 170969393 | shortage | A situation in which, at the going market price, the quantity demanded exceeds the quantity supplied | 105 | |
| 170969394 | subsidy | A gov't transfer, either to consumers or producers, on the consumption or production of a good | 106 | |
| 170969395 | fixed inputs | production inputs that cannot be changed in the short run | 107 | |
| 170969396 | marginal resource cost | The ∆ in a firm's TC from the hiring of an additional unit of an input | 108 | |
| 170969397 | MRC | marginal resource cost abbrv. | 109 | |
| 170969398 | oligopoly | A very diverse market structure characterized by a small # of interdependent large firms, producing either a standardized or differentiated product in a market w/ a barrier to entry | 110 | |
| 170969399 | marginal | The next unit, or increment of, an action | 111 | |
| 170969400 | production possibilities | The different quantities of goods that an economy can produce w/ a given amount of scarce resources | 112 | |
| 170969401 | Total Variable Costs | Production costs that ∆ w/ the level of output | 113 | |
| 170969402 | TVC | Total Variable Costs | 114 | |
| 170969403 | accounting profit | The difference b/w total revenue & total explicit cost | 115 | |
| 170969404 | marginal product of labor | ∆ in total product resulting from a ∆ in labor input | 116 | |
| 170969405 | MPL | marginal product of labor | 117 | |
| 170969406 | derived demand | Demand for a resource arising from the demand for the goods produced by the resource | 118 | |
| 170969407 | normal goods | A good for which demand increases w/ an increase in consumer income | 119 | |
| 170969408 | Law of Demand | All else =, when P of a good rises, the quantity demanded of that good falls | 120 | |
| 170969409 | free-rider problem | The lack of private funding for a public good due to the presence of free riders | 121 | |
| 170969410 | productivity | The quantity of output that can be produced per worker in a given amount of time | 122 | |
| 170969411 | collusive oligopoly | Models where firms agree to work together to mutually improve their situation | 123 | |
| 170969412 | market economy | An economic system in which resources are allocated through the decentralized decisions of firms & consumers | 124 | |
| 170969413 | total welfare | The sum of consumer surplus & producer surplus | 125 | |
| 170969414 | dead weight loss | The lost net benefit to society caused by a movement from the competitive market equilibrium | 126 | |
| 170969415 | demand schedule | A table showing quantity demanded for a good at all prices | 127 | |
| 170969416 | utility | Happiness, or benefit, or satisfaction, or enjoyment gained from consumption of goods & services | 128 | |
| 170969417 | utility maximizing rule | The consumer chooses amounts of goods X & Y, w/ their limited income, so that the marginal utility per dollar spent = for both goods | 129 | |
| 170969418 | utils | A hypothetical unit of measurement often used to quantify utility A.k.a "happy points" | 130 | |
| 170969419 | variable inputs | production inputs that the firm can adjust in the short run to meet changes in demand for the firm's output | 131 | |
| 170969420 | economic profit | The difference b/w total revenue & total economic cost | 132 | |
| 170969421 | monopoly | A market structure in which one firm is the sole producer of a good w/ no close substitutes in a market w/ entry barriers | 133 | |
| 170969422 | total utility | The total happiness received from consumption of a # of units of a good | 134 | |
| 170969423 | luxury | A good for which the proportional increase in consumption exceeds the proportional increase in income | 135 | |
| 170969424 | cross-price elasticity of demand | A measure of how sensitive the consumption of good X is to ∆ in the price of good Y | 136 | |
| 170969425 | cartel | Firms that agree to maximize their joint profits rather than compete | 137 | |
| 170969426 | lorenz curve | A graphical device that shows how a nation's income is distributed across the nation's households | 138 | |
| 170969427 | negative externality | The existence of spillover costs upon third parties from the production of a good | 139 | |
| 170969428 | elasticity along the demand curve | At the midpoint of a linear demand curve, Ed = 1. Above the midpoint demand is elastic & below the midpoint demand is inelastic | 140 | |
| 170969429 | economies of scale | The downward part of the long-run ATC curve where LRAC falls as plant size rises | 141 | |
| 170969430 | income elasticity | A measure of how sensitive consumption of a good is to a ∆ in consumer's income | 142 | |
| 170969431 | factors of production | inputs or resources that go into the production function to produce goods & services | 143 | |
| 170969432 | proportional tax | A tax where proportion of income paid in taxes is constant no matter what level of income | 144 | |
| 170969433 | consumer surplus | The difference b/w a buyer's willingness to pay & the price actually paid | 145 | |
| 170969434 | implicit costs | Indirect, non-purchased, or opportunity costs of resources provided by the entrepreneur | 146 | |
| 170969435 | private goods | goods that are both rival & excludable | 147 | |
| 170969436 | price elasticity of demand | Measures the sensitivity of consumers' quantity demanded for good X when the price of good X ∆s | 148 | |
| 170969437 | marginal revenue product of labor | The ∆ in a firm's TR from the hiring of an additional unit of an input | 149 | |
| 170969438 | constant returns to scale | the horizontal range of long-run ATC where LRAC is constant over a variety of plant sizes | 150 | |
| 170969439 | law of diminishing marginal returns | As successive units of a variable unit are added to a fixed input, beyond some point the marginal product declines | 151 | |
| 170969440 | inferior goods | A good for which demand decreases w/ an increase in consumer income | 152 |
