Terms : Hide Images
| 6699051363 | positive statement | describes the way things are; factual | 0 | |
| 6699060240 | normative statement | describes the way things should be; opinion; not economics | 1 | |
| 6699064468 | scarcity | the inability to satisfy all wants, limited by time, income and price | 2 | |
| 6699073082 | economics | the study of how to allocate scarce resources among competing ends | 3 | |
| 6699076207 | resources | inputs or factors of production | 4 | |
| 6699091167 | factors of production | land, labor, capital and entrepreneurship | 5 | |
| 6699080775 | goods and services | objects and actions that satisfy wants | 6 | |
| 6699099242 | opportunity cost | the best opportunity alternative you give up to do something else | 7 | |
| 6699108239 | benefit | gain measured by what you are willing to give up | 8 | |
| 6699116226 | production-possibilities frontier (PPF) | the boundary between the combinations of goods and services that can be produced and those that cannot given fixed factors of production |  | 9 |
| 6699134127 | production efficiency | when the economy is using all of its resources productively; any point on the PPF | 10 | |
| 6699147438 | division of labor | permits people to develop expertise in the task(s) that they concentrate on | 11 | |
| 6699170194 | absolute advantage | when a country can produce a good at a lower opportunity cost than any other country | 12 | |
| 6699175668 | comparative advantage | when a country can produce a good at a lower opportunity cost than another country | 13 | |
| 6699183665 | economic questions | what, how, and for whom to produce | 14 | |
| 6699187082 | allocative efficiency (efficiency in output) | when the national output reflects the needs and wants of consumers (MV=MC) | 15 | |
| 6699202843 | marginal cost (MC) | the additional cost of producing one more unit | 16 | |
| 6699205018 | marginal value (MV) | the value of one more unit | 17 | |
| 6699215005 | P=MC | the point at which allocative efficiency is reached | 18 | |
| 6699220732 | efficiency in production (technical efficiency) | when the output of one good could not be increased without decreasing the output of another good |  | 19 |
| 6699238618 | wage (W) | the price of labor | 20 | |
| 6699238619 | rental rate (R) | the price of capital | 21 | |
| 6699246255 | marginal product of labor (MPL) | the additional output produced by one more unit of labor | 22 | |
| 6699272620 | marginal product of capital (MPK) | the additional output produced by one more unit of capital | 23 | |
| 6699281459 | marginal physical product | can refer to either MPL or MPK | 24 | |
| 6699353145 | distributive efficiency (efficiency in exchange) | when consumers make purchases that maximize their satisfaction given their budgetary constraints; found when the ratio of MU to P of one good equals that of the other | 25 | |
| 6699356501 | marginal utility (MU) | the additional utility from consuming one more unit of a good | 26 | |
| 6699438639 | communism | a system designed to minimize imbalance in wealth via the collective ownership of property; lacks incentives and is vulnerable to corruption | 27 | |
| 6699448132 | socialism | a system designed to achieve fair distribution via wages set by negotiations between trade unions and managers; lacks incentives | 28 | |
| 6699466120 | capitalism | a system where private individuals control the factors of production and operate them in the pursuit of profit | 29 | |
| 6699470306 | demand curve | a curve that displays the relationship between price and quantity demanded within a given period; also can be represented in a demand schedule | 30 | |
| 6699481031 | law of diminishing marginal utility | as additional units of a good are consumed in a given time period, each additional unit's utility decreases | 31 | |
| 6699488896 | law of demand | as the price of a good rises, the quantity demanded decreases, and as the price of a good falls, the quantity demanded increases | 32 | |
| 6699524380 | market demand curve | the sum of all individual demand curves in a market | 33 | |
| 6699496703 | supply curve | a curve that displays the relationship between price and quantity supplied within a given period; also can be represented in a supply schedule | 34 | |
| 6699510103 | law of supply | as the price of a good rises, the quantity supplied increases, and as the price of a good falls, the quantity supplied decreases | 35 | |
| 6699524381 | market supply curve | the sum of all individual supply curves in a market | 36 | |
| 6699531116 | equilibrium | the point of intersection between the demand curve and the supply curve; optimal point of production | 37 | |
| 6699535807 | surplus | when price exceeds equilibrium | 38 | |
| 6699542748 | shortage | when price falls below equilibrium | 39 | |
| 6699545222 | change in the quantity demanded | a MOVEMENT ALONG the demand curve, caused by change in price | 40 | |
| 6699547479 | change in demand | a SHIFT of the demand curve, caused by: Tastes and preferences of consumers Related good prices (substitutes + complements) Income of buyers Buyer pool size Expectations for future income, prices + shortages | 41 | |
| 6699636921 | normal good | a good that consumers buy more of when income increases | 42 | |
| 6699640099 | inferior good | a good that consumers buy more of when income decreases | 43 | |
| 6699585149 | change in the quantity supplied | a MOVEMENT ALONG the supply curve, caused by change in price | 44 | |
| 6699588305 | change in supply | a SHIFT of the supply curve, caused by: Resource costs Other goods' prices (production substitutes and joint products) Taxes and subsidies Technology changes Expectations of suppliers Number of suppliers | 45 | |
| 6699613875 | price ceiling | an artificial cap on the price of a good; causes deadweight loss, shortages, and a black market if below equilibrium | 46 | |
| 6699619537 | queuing cost | the time lost waiting in line | 47 | |
| 6699625490 | price floor | an artificially imposed minimum price; causes deadweight loss and surpluses if above equilibrium | 48 | |
| 6699630326 | minimum wage | a price floor for labor | 49 | |
| 6699652910 | total utility | the sum of marginal utility values gained from each of the units consumed; the integral of MU | 50 | |
| 6699667592 | consumer surplus | the value received from the purchase of a good in excess of what is paid for |  | 51 |
| 6699679090 | producer surplus | the difference between the price a seller receives for a good and the minimum price for which she would be willing to supply a quantity of the good |  | 52 |
| 6699686061 | elasticity | the responsiveness of something to various changes; equal to the inverse of the slope multiplied by price over quantity | 53 | |
| 6699688151 | price elasticity of demand | the responsiveness of the quantity demanded to price changes |  | 54 |
| 6699691041 | determinants of price elasticity of demand | Proportion of income spent on the good Availability of close substitutes Importance of the good (luxury vs. necessity) Delaying the purchase of a good (how easy is it) | 55 | |
| 6699712636 | elastic | percentage change in quantity demanded is greater than percentage change in price (elasticity is greater than one) | 56 | |
| 6699735823 | luxuries | elastic goods | 57 | |
| 6699721787 | unit elastic | percentage change in quantity demanded equals percentage change in price (elasticity is one) | 58 | |
| 6699735824 | inelastic | percentage change in quantity demanded is less than the percentage change in price (elasticity is less than one) | 59 | |
| 6699741733 | necessities | inelastic goods | 60 | |
| 6699765117 | elasticity of supply | the responsiveness of the quantity supplied to price changes |  | 61 |
| 6699777011 | income elasticity of demand | measures the responsiveness of the quantity demanded to changes in income; if positive, the good is normal; if negative, the good is inferior |  | 62 |
| 6699787482 | cross-price elasticity of demand | the responsiveness of the quantity-demanded of Good A to the price of Good B |  | 63 |
| 6699795392 | complements | two goods with a negative cross-price elasticity of demand (change in the opposite direction) | 64 | |
| 6699805675 | substitutes | two goods with a positive cross-price elasticity of demand (change in the same direction) | 65 | |
| 6699810182 | deadweight loss (excess burden) | the loss to former consumer and producer surplus in excess of the total revenue of the tax | 66 | |
| 6699814269 | marginal product | the additional output produced per period when one more unit of an input is added, holding the quantities of other inputs constant; the derivative of TP | 67 | |
| 6699821132 | law of diminishing marginal returns | as the amount of one input is increased, holding the amounts of all other inputs constant, the incremental gains in output ("marginal returns") will eventually decrease | 68 | |
| 6699840947 | diminishing marginal returns | when an additional unit of input contributes less to total output that the unit before it | 69 | |
| 6699847079 | average product | total product divided by the quantity of input | 70 | |
| 6699854237 | total product curve | the relationship between the total amount of output produced and the number of units of an input used, holding the amounts of other inputs constant; the integral of MP | 71 | |
| 6699866552 | fixed costs | costs that do not change when more output is produced | 72 | |
| 6699868349 | variable costs | costs that do change as more output is produced | 73 | |
| 6699870117 | marginal cost | the amount by which cost increases when one more unit of output is produced | 74 | |
| 6699878114 | LRAC | long-run average cost | 75 | |
| 6699887190 | SRAC | short-run average cost | 76 | |
| 6699890173 | economies of scale | the interval over the range of output where the LRAC is decreasing, meaning that the cost per unit is falling | 77 | |
| 6699895490 | diseconomies of scale | the interval over the range of output where LRAC is increasing | 78 | |
| 6699901229 | increasing returns (to scale) | when output increases (proportionally) more than increases in ALL inputs | 79 | |
| 6699916105 | decreasing returns (to scale) | when output increases (proportionally) less than increases in ALL inputs | 80 | |
| 6699923453 | constant returns (to scale) | when output increases in proportion to increases in all units | 81 | |
| 6699926365 | diminishing (marginal) returns | when an additional unit of an input increases total output by less than the previous unit of the input, holding all other inputs constant | 82 | |
| 6699941870 | increasing cost firm | a firm facing decreasing returns to scale, meaning that output increases less than in proportion to all inputs | 83 | |
| 6699944310 | decreasing cost firm | a firm facing increasing returns to scale, meaning that output increases more than in proportion to all inputs | 84 | |
| 6699946660 | increasing cost industry | an industry that increases in average production costs as industry output increases; positively sloped long-run supply curve | 85 | |
| 6699951399 | constant cost industry | an industry that does not experience increased production costs as output grows; horizontal long-run supply curve | 86 | |
| 6699960106 | decreasing cost industry | an industry that decreases in average production costs as industry output increases; negative long-run supply curve | 87 | |
| 6699964199 | productive efficiency | occurs when a firm produces at the lowest unit cost, where marginal cost (MC) equals average cost (AC) | 88 | |
| 6699969523 | economies of scope | when a firm's average production costs decrease because multiple products are being produced | 89 | |
| 6699974286 | perfect competition | an industry in which there are very many firms, free entry and exit, no market power ("price takers"), a homogenous product, and zero long run economic profit; MR=P | 90 | |
| 6699980902 | price taker | a seller who cannot manipulate the price of their good and must sell at the set market price | 91 | |
| 6699991410 | economic profit | total revenue minus total cost (including opportunity cost) | 92 | |
| 6699994683 | normal profit | the opportunity cost of capital; zero economic profit | 93 | |
| 6700016989 | accounting profit | total revenue minus total cost (excluding opportunity cost) | 94 | |
| 6700020230 | total revenue (TR) | the amount of money taken in from the sale of a good; the integral of MR |  | 95 |
| 6700025998 | marginal revenue (MR) | the addition to revenue gained when one more unit is sold; the derivative of TR | 96 | |
| 6700032230 | average revenue (AR) | total revenue divided by quantity | 97 | |
| 6700034850 | profit | the difference between total revenue (TR) and total cost (TC); profit-maximizing firms want to produce where TR > TC and where TR-TC is greatest | 98 | |
| 6700046230 | shut down decision | when the price of a good equals or is smaller than the minimum of average variable cost (AVC) | 99 | |
| 6700070707 | monopolistic competition | an industry in which there are many firms, few entry and exit barriers, small market power, a differentiated product, and zero long run economic profit | 100 | |
| 6700097905 | oligopoly | an industry in which there are few firms, high entry and exit barriers, substantial market power, either homogenous or differentiated products, and positive or zero long run economic profit | 101 | |
| 6700144417 | market power | the ability of an individual firm to influence price | 102 | |
| 6700107020 | monopoly | an industry in which there is a single firm, prohibitive entry and exit barriers, complete market power, a unique product, and positive or zero long run economic profit; MR is lower than P | 103 | |
| 6700124640 | price discrimination | charging different customers different prices that do not reflect differences in production costs | 104 | |
| 6700128114 | perfect price discrimination | results in a marginal revenue curve that coincides with the demand curve | 105 | |
| 6700146004 | game theory | the strategic decisions of "players" in anticipation of their rivals' reactions | 106 | |
| 6700149127 | payoff matrix | an illustration of the game theory |  | 107 |
| 6700159543 | Nash equilibrium | whenever two circles appear in the same square of a payoff matrix; neither party has an incentive to deviate from his strategy given the strategy of the other side | 108 | |
| 6700168544 | prisoner's dilemma | a payoff matrix that explains arms races, the failure of cartels, and excessive spending on advertising expenditures |  | 109 |
| 6700176472 | natural monopolies | industries that have such high fixed costs that it would be impossible for a particular service area to support more than one firm, such as power generation and rail service | 110 | |
| 6700182575 | The Sherman Act (1890) | an act that declared attempts to monopolize commerce or restrain trade among the states illegal | 111 | |
| 6700185854 | The Clayton Act (1914) | an act that strengthened the Sherman Act by specifying that monopolistic behavior such as price discrimination, tying contracts and unlimited mergers are illegal | 112 | |
| 6700190362 | The Robinson-Patman Act (1936) | an act that prohibits price discrimination except when it is based on differences in cost, difference in marketability of product, or a good faith effort to meet competition | 113 | |
| 6700195699 | The Celler-Kefauver Act (1950) | an act that authorized the government to ban vertical mergers, conglomerate mergers and horizontal mergers | 114 | |
| 6700200434 | vertical mergers | mergers of firms at various steps in the production process from raw materials to finished products | 115 | |
| 6700202997 | conglomerate mergers | combinations of firms from unrelated industries | 116 | |
| 6700205734 | horizontal mergers | mergers of direct competitors | 117 | |
| 6700209071 | Herfindahl-Hirschman Index (HHI) | a measure of market power that takes the market share of each firm in an industry as a percentage, squares each percentage, and adds them all up |  | 118 |
| 6700219049 | "n"-firm concentration ratio | the sum of the market shares of the largest "n" firms in an industry, where "n" can represent any number | 119 | |
| 6700225701 | marginal revenue product of labor (MRPL) | the product of the marginal product of labor and price; shifts the demand for labor | 120 | |
| 6700248613 | monopsony | an industry in which one firm is the sole purchaser of labor services in a market, pushing MFC above the supply curve | 121 | |
| 6700252608 | marginal factor cost (MFC) | the additional cost of hiring one more worker | 122 | |
| 6700261564 | unions | a group of workers that lobby to increase wages for its members by increasing the demand for labor, decreasing the supply of labor, or negotiating higher wages | 123 | |
| 6700266647 | bilateral monopoly | an industry in which there is just one seller and one buyer | 124 | |
| 6700269693 | market failure | occurs when resources are not allocated optimally, resulting from imperfect competition, externalities, public goods, or imperfect information | 125 | |
| 6700273918 | imperfect information | buyers and/or sellers do not have full knowledge about available markets, prices, products, customers, suppliers, and so forth | 126 | |
| 6700277483 | externalities | cost or benefits felt beyond or "external to" those causing the effects; also known as spillover effects | 127 | |
| 6700281082 | negative externality | a harmful external effect of production; leads to overconsumption | 128 | |
| 6700290399 | positive externality | a beneficial external effect of production; leads to underconsumption | 129 | |
| 6700294435 | marginal private cost (MPC) | the additional cost per unit of a good | 130 | |
| 6700300413 | marginal external cost (MEC) | the additional cost per unit of a good imposed on people who are not the consumer | 131 | |
| 6700309183 | marginal external benefit (MEB) | the additional benefit per unit of a good enjoyed by people who are not the consumer | 132 | |
| 6700311397 | public good | a good that is nonrival in consumption and nonexcludable | 133 | |
| 6700314191 | nonrival | one person's consumption of a good does not affect its consumption by others | 134 | |
| 6700316348 | nonexcludable | a good that cannot be held back from those who desire access | 135 | |
| 6700323927 | free rider | someone who attempts to benefit from a public good without paying for it | 136 | |
| 6700326044 | Lorenz curve | a graph that measures income distribution |  | 137 |
| 6700332861 | Gini coefficient | the area between the line of perfect equality (45°) and the Lorenz curve divided by the area between the line of perfect equality and the corners of the box; quantifies income distribution | 138 | |
| 6700359535 | poverty line | the official benchmark of poverty; for a family of four, it is $24,000 | 139 | |
| 6700362427 | progressive tax | a tax that increases in percentage relative to an increase in income | 140 | |
| 6700364418 | regressive tax | a tax that decreases in percentage relative to an increase in income | 141 | |
| 6700367807 | proportional tax | a tax that collects the same percentage regardless of income | 142 | |
| 6700370492 | Social Security | a program that provides cash benefits and health insurance (Medicare) to retired and disabled workers and their families | 143 | |
| 6700375739 | Public Assistance | also known as welfare; typically provides temporary assistance to the very poor | 144 | |
| 6700379207 | Supplemental Security Income (SSI) | a program that assists very poor elderly individuals who have virtually no assets and little or no SS entitlement | 145 | |
| 6700385881 | unemployment compensation | a program that provides temporary assistance to unemployed workers | 146 | |
| 6700387259 | Medicaid | a program that provides health and hospitalization benefits to the poor | 147 | |
| 6700388966 | Food Stamp Program | a program that provides food for the poor | 148 | |
| 6700390898 | Public Housing Program | a program that provides shelter for the poor | 149 |
