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Economics Chapters 1-5 Vocab Flashcards

Chapter 1 - Ten Principles of Economics;
Chapter 2 - Thinking Like an Economist;
Chapter 3 - Interdependence and the Gains from Trade;
Chapter 4 - The Market Forces of Supply and Demand;
Chapter 5 - Elasticity and Its Application

Terms : Hide Images
1720791292Scarcitythe limited nature of society's resources; it means that society has limited resources and therefore cannot produce all the goods and services people wish to have it means simply that needs and wants exceed the resources available to meet them0
1720791293Economicsthe study of how society manages its scarce resources the study of how society uses its scarce resources1
1720791294Efficiencythe property of society getting the most it can from its scarce resources; it means that society is getting the maximum benefits from its scarce resources getting the most out of the resources used2
1720791295Equalitythe property of distributing economic prosperity uniformly among the members of society; it means that those benefits are distributed uniformly among society's members3
1720791296Opportunity Costwhatever must be given up to obtain some item; what you give up to get that item4
1720791297Rational Peoplepeople who systematically and purposefully do the best they can to achieve their objectives, given the available opportunities5
1720791298Marginal Changea small incremental adjustment to a plan of action6
1720791299Incentivesomething that induces a person to act7
1720791300Market Economyan economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services; the decisions of a central planner are replaced by the decisions of millions of firms and households an economy in which a substantial proportion of goods are allocated by the use of markets8
1720791301Property Rightsthe ability of an individual to own and exercise control over scarce resources the rights of an owner over property9
1720791302Market Failurea situation in which a market left on its own fails to allocate resources efficiency10
1720791303Externalitythe impact of one person's actions on the well-being of a bystander11
1720791304Market Powerthe ability of a single economic actor (or small group of actors) to have a substantial influence on market prices; it refers to the ability of a single person or firm (or a small group) to unduly influence market prices12
1720791305Productivitythe quantity of goods and services produced from each unit of labor input; the amount of goods and services produced by each unit of labor input13
1720791306Inflationan increase in the overall level of prices in the economy14
1720791307Business Cyclefluctuations in economic activity, such as employment and production; the irregular and largely unpredictable fluctuations in economic activity, as measured by the production of goods and services or the number of people employed15
1722122823Circular-Flow Diagrama visual model of the economy that shows how dollars flow through markets among households and firms16
1722127286Production Possibilities Frontiera graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology17
1722130938Microeconomicsthe study of how households and firms make decisions and how they interact in markets18
1722133015Macroeconomicsthe study of economy-wide phenomena, including inflation, unemployment, and economic growth19
1722136804Positive Statementsclaims that attempt to describe the world as it is; they are descriptive20
1722139124Normative Statementsclaims that attempt to prescribe how the world should be; they are prescriptive21
1722422578Absolute Advantagethe ability to produce a good using fewer inputs than another producer22
1722422579Comparative Advantagethe ability to produce a good at a lower opportunity cost than another; the producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X and is said to have a comparative advantage in producing it23
1722422580Importsgoods produced abroad and sold domestically24
1722422581Exportsgoods produced domestically and sold abroad25
1722528034Marketa group of buyers and sellers of a particular good or service; the buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product26
1722528035Competitive Marketa market in which there are many buyers and many sellers so that each has a negligible impact on the market price27
1722528036Quantity Demandedthe amount of a good that buyers are willing and able to purchase28
1722528037Law of Demandthe claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises29
1722528038Demand Schedulea table that shows the relationship between the price of a good and the quantity demanded30
1722528039Demand Curvea graph of the relationship between the price of a good and the quantity demanded31
1722528040Normal Gooda good for which, other things being equal, and increase in income leads to an increase in demand; if the demand for a good falls when income falls32
1722528041Inferior Gooda good for which, other things being equal, and increase in income leads to a decrease in demand; if the demand for a good rises when income falls33
1722528042Substitutestwo goods for which an increase in the price of one leads to an increase in the demand for the other; when a fall in the price of one good reduces the demand for another good; they are often pairs of goods that are used in place of each other34
1722528043Complementstwo goods for which and increase in the price of one leads to a decrease in the demand for the other; when a fall in the price of one good raises the demand for another good; they are often pairs of goods that are used together35
1722706173Quantity Suppliedthe amount of a good that sellers are willing and able to sell36
1722706174Law of Supplythe claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises37
1722706175Supply Schedulea table that shows the relationship between the price of a good and the quantity supplied38
1722706176Supply Curvea graph of the relationship between the price of a good and the quantity supplied39
1722706177Equilibriuma situation in which the market price has reached the level at which quantity supplied equals quantity demanded40
1722706178Equilibrium Pricethe price that balances quantity supplied and quantity demanded41
1722706179Equilibrium Quantitythe quantity supplied and the quantity demanded at the equilibrium price42
1722706180Surplusa situation in which quantity supplied is greater than quantity demanded43
1722706181Shortagea situation in which quantity demanded is greater than quantity supplied44
1722706182Law of Supply and Demandthe claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance45
1722706183Elasticitya measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants; to measure how much consumers respond to changes in these variables46
1722706184Price Elasticity of Demanda measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price47
1722706185Total Revenuethe amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold48
1722706186Income Elasticity of Demanda measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income49
1722706187Cross-Price Elasticity of Demanda measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in price of the second good50
1722706188Price Elasticity of Supplya measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price51

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