Based on Practice midterm Flashcards
(28 cards)
Supply and Demand
The relationship between the amount of goods available and the desire for them.
Opportunity Cost
The value of the next best alternative foregone when a choice is made.
Elasticity
A measure of how much the quantity demanded or supplied of a product changes in response to a price change.
Comparative Advantage
The ability of a country to produce a good at a lower opportunity cost than another country.
Marginal Utility
The additional satisfaction gained from consuming one more unit of a good or service.
GDP (Gross Domestic Product)
The total monetary value of all final goods and services produced within a country’s borders in a specific time period.
Inflation
A general increase in prices and a fall in the purchasing value of money.
Monetary Policy
The process by which a central bank controls the supply of money, often targeting an inflation rate or interest rate.
Fiscal Policy
Government policy that uses taxation and government spending to influence the economy.
Unemployment Rate
The percentage of the labor force that is jobless and actively looking for work.
Balance of Trade
The difference between a country’s exports and imports.
Price Ceiling
A government-imposed limit on how high a price can be charged for a product.
Price Floor
A government-imposed limit on how low a price can be charged for a product.
Public Goods
Goods that are non-excludable and non-rivalrous, meaning they are available to everyone and one person’s use doesn’t reduce availability for others.
Externalities
Costs or benefits that affect a third party not directly involved in an economic transaction.
Substitute Goods
Products or services that can replace each other.
Complementary Goods
Products that are used together, where an increase in demand for one increases demand for the other.
Market Equilibrium
The point where supply and demand are equal, and the market clears.
Law of Diminishing Returns
As more of a variable resource (like labor) is added to a fixed resource (like capital), the additional output produced from each new unit of labor eventually decreases.
Perfect Competition
A market structure where many firms offer a homogeneous product, and no single firm can influence the market price.
Monopoly
A market structure where a single firm dominates the market.
Oligopoly
A market structure dominated by a few large firms.
Price Discrimination
Charging different prices to different customers for the same product based on their willingness to pay.
Natural Monopoly
A type of monopoly that arises due to high fixed costs and economies of scale.
