Econ Exam #1 Flashcards
Economics is….
individuals decide to use scarce recourses in an attempt to satisfy their unlimited wants.
Recourses are
labor, natural resources, capital, and enterpunural ability
the circular flow includes
labor, capitol, goods and services, and entraperueral ability.
opportunity cost is
the value of the next best alternative
an absolute advantage is
when you can produce goods using fewer recourses than another person can require
to find comparative advantage…
start with the number that will be in the final answer and divide it by the “object” in the question
factors that cause movement on the supply/demand curve
price change
factors that cause a shift in the demand curve
income, price of other goods, number of consumers, future expectations
factors that cause a shift in the supply curve
improved tech, price of recourses, # of producers, and price of goods
in the case of an normal good a decrease in consumers income would shift the ..
demand curve outward
the market supply is…
sum of all individual supply curves
a surplus occurs…
current price is greater than equilibrium price
if there is a shortage in the market for shoes…
a. the price should rise to eliminate the shortage
b. inventories of athletic shoes will grow
c. demand will decrease to restore equilibrium
d. firms will reduce production to restore the equilibrium
e. supply will increase to restore the equillibrium
A
*not C or E because it has to be “quantity” to be movement on the curve
a horizontal straight line on a graph shows…
perfectly elastic supply or demand
a ______ number will tell you if a good is an inferior good
negative
