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Microeconomics > Chp. 1-4 > Flashcards

Chp. 1-4 Flashcards

1
Q

Good

A

Utility or satisfaction

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2
Q

Bad

A

Dis-utility or dissatisfaction

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3
Q

Utility

A

Satisfaction received from good

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4
Q

Disutility

A

Dissatisfaction from good

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5
Q

CELL

A

Capital, entrepreneurship, land, labor

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6
Q

Land

A

Natural resources

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7
Q

Labor

A

Physical and mental talents of people

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8
Q

Capital

A

Goods used to make other goods

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9
Q

Entrepreneurship

A

Risk takers and organizers of land, labor, capital

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10
Q

Economics

A

Science of scarcity

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11
Q

Unlimited _______, Limited ________

A

Wants, Resources

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12
Q

Rationing device

A

Mean to decide who gets what of limited resources

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13
Q

Factors decide who gets what

A

Money, time, Rationing device

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14
Q

Opportunity costs

A

Next best alt. given up

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15
Q

Marginal benefits

A

Additional benefits of consuming one more unit

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16
Q

Marginal cost

A

Additional cost of consuming one more unit

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17
Q

Decisions at Margin

A

Decision made by weighing marginal benefits and costs

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18
Q

Efficiency

A

MB=MC

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19
Q

Incentive

A

Encourage or motivate to undertake action

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20
Q

Exchange

A

Trade

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21
Q

Ceteris Paribus

A

“All things constant” or “Nothing else changes”

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22
Q

Theory

A

Abstract rep. of real world

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23
Q

Abstract

A

Build theory, Focusing variables to explain/predict an event

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24
Q

Positive Economics

A

What is

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25
Q

Normative Economics

A

What should be

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26
Q

Microeconomics

A

Smaller scale or individual

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27
Q

Macroeconomics

A

Larger scale, entire economy, aggregate

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28
Q

Production Possibilities Frontier (PPF)

A

Combo two goods produced during certain time under current technology and employed resources

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29
Q

Law of Increasing Opportunity Costs

A

More goods produced increases opportunity costs

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30
Q

Productive Efficiency

A

Max output is produced with given resources and technology

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31
Q

Productive Inefficiency

A

Less than max output is produced with given resources and technology

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32
Q

Productive Inefficiency implies…

A

More of one good can be produced without producing any less of another

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33
Q

Comparative Advantage

A

Someone can produce a good at lower opportunity cost than someone else can

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34
Q

Three effects of scarcity

A

Need to make choices, rationing device, and competition

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35
Q

Competition occurs

A

Because of scarcity and takes form of people trying to get more of the rationing device

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36
Q

Higher opportunity cost

A

Less likely it will be done

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37
Q

Economic problems

A
  1. Problem identified and defined/described
  2. Individuals attempt to identify cause of problem
  3. Individuals propose solutions to problem
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38
Q

Assumptions are…

A

Resources and technology are fixed and rules off game remain unchanged

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39
Q

Straight line PPF

A

Opportunity costs are constant

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40
Q

Bowed Outward PPF

A

Opportunity costs increase

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41
Q

PPF Attainable Region

A

Points on and below PPF curve

42
Q

PPF Unattainable Region

A

Points above and beyond PPF curve

43
Q

Unattainable

A

Inefficient

44
Q

Within attainable region

A

Individuals must choose which combo goods to produce

45
Q

Attainable on curve

A

Efficient with full production

46
Q

Attainable below curve

A

Inefficient due to not using all resources

47
Q

Economic growth

A

Increased productive capabilities of economy; rightward shift in PPF

48
Q

Economic growth caused by…

A

Increase in quality or quantity of resources or advance in technology

49
Q

PPF shift left

A

Loss of resources

50
Q

Specialization

A

One country specializing can trade with countries producing other goods to make themselves better off

51
Q

Specialization in simple PPF

A

Specialize to have comparative advantage them trade for other goods; moves PPF right

52
Q

Consume more of multiple goods by…

A

Specializing and trading

53
Q

Market

A

Any place people come together to trade

54
Q

Buying side

A

Demand

55
Q

Selling side

A

Supply

56
Q

Demand

A

The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific period

57
Q

Law of Demand

A

As the price of a good rises, the quantity demanded of the good falls, and as the price of a good falls, the quantity demanded of the good rises, ceteris paribus

58
Q

Ways to represent Law of Demand

A

Words, symbols, demand schedule, demand curve

59
Q

Demand Schedule

A

The numerical tabulation of the quantity demanded of a good at different prices

60
Q

Demand Curve

A

Downward slopping due to wanting cheaper goods

61
Q

Law of Diminishing Marginal Utility

A

Marginal (or additional) utility or satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases

62
Q

Normal Good

A

A good for which demand rises (falls) as income rises (falls)

63
Q

Inferior Good

A

A good for which demand falls (rises) as income rises (falls)

64
Q

Neutral Good

A

A good for which demand does not change as income rises or falls

65
Q

Substitutes

A

Two goods that satisfy similar needs or desires

66
Q

Complements

A

Two goods that are used jointly in consumption

67
Q

Change in quantity demanded

A

On the curve

68
Q

Change in demand

A

Of the curve

69
Q

Change in demand caused by…

A

Income (direct), preferences (Inverse), number buyers (direct), expectations of future price (direct)

70
Q

Supply

A

The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific period

71
Q

Law of Supply

A

As the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls, ceteris paribus

72
Q

Supply Curve

A

Upward slopping direct relationship

73
Q

Change in supply caused by…

A

prices of relevant resources, technology, number of sellers, expectations of future price, taxes and subsidies, govt restrictions

74
Q

Surplus (Excess Supply)

A

A condition in which the quantity supplied is greater than the quantity demanded; above equilibrium

75
Q

Shortage (Excess Demand)

A

A condition in which the quantity demanded is greater than the quantity supplied; below equilibrium

76
Q

Equilibrium Price (Market-Clearing Price)

A

The price at which the quantity demanded of a good equals the quantity supplied

77
Q

Equilibrium Quantity

A

The quantity at which the amount of the good that buyers are willing and able to buy equals the amount that sellers are willing and able to sell, and both equal the amount actually bought and sold

78
Q

Disequilibrium Price

A

A price at which the quantity demanded does not equal the quantity supplied

79
Q

Disequilibrium

A

A state of either surplus or shortage in a market

80
Q

Equilibrium

A

equilibrium is the intersection point of the supply and demand curves

81
Q

Consumers’ Surplus

A

The difference between the maximum price a buyer is willing and able to pay for a good or service and the price actually paid

82
Q

Producers’ (Sellers’) Surplus

A

The difference between the price sellers receive for a good and the minimum or lowest price for which they would have sold the good

83
Q

Total Surplus

A

The sum of consumers’ surplus and producers’ surplus

84
Q

Spontaneous Order

A

The spontaneous and unintended emergence of order out of the self-interested actions of individuals

85
Q

Limited supply

A

Vertical line (constant)

86
Q

Price Ceiling

A

A government-mandated maximum price above which legal trades cannot be made

87
Q

Tie-in Sale

A

A sale whereby one good can be purchased only if another good is also purchased

88
Q

Price Floor

A

A government-mandated minimum price below which legal trades cannot be made

89
Q

Deadweight Loss

A

he loss to society of not producing the competitive, or supply-and-demand–determined, level of output

90
Q

Absolute (Money) Price

A

The price of a good in money terms

91
Q

Relative Price

A

The price of a good in terms of another good

92
Q

Price preforms two major jobs…

A

Rationing device and transmitter of info

93
Q

Price ceilings lead to…

A

Shortages, fewer exchanges, nonprice rationing devices, buying and selling at prohibited prices, and tie in sales

94
Q

Price ceilings lead to..

A

Distorted flow of accurate info to buyers

95
Q

Below equilibrium

A

Price Ceiling

96
Q

Above equilibrium

A

Price floor

97
Q

Price floors lead to…

A

Surpluses and fewer exchanges

98
Q

Price floor example

A

Min wage

99
Q

Effects of min wage

A

surplus of unskilled workers and fewer workers employed

100
Q

Overall effect of price floor…

A

Consumers lose, producers gain, and society loses

Microeconomics (1 decks)

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