Identify the "X" axis and "Y" axis of a graph.
"X" axis is the horizontal line; "Y" axis is the vertical line. (To help remember, the "Y" has a vertical element to it.)
What are the major types (extremes) of economic systems?
1. Command Economic System; 2. Market (Free-enterprise) Economic System.
What is macroeconomics?
The economic activities and outcomes of a group of entities taken together, typically of an entire nation or major sectors of a national economy.
What is a time-series graph?
A graph showing changes in a variable over time. Commonly, time is considered the independent variable and plotted on the horizontal "X" axis.
What are the characteristics of a Command economic system?
Government largely determines the production, distribution and consumption of goods and services (e.g., Communism and Socialism).
What does "ceteris paribus" mean, as used in economics?
Assumption that any influences other than the variable(s) being considered are held constant. Literally, "all else being equal."
What is the meaning of a graphed plot with a positive slope?
The two variables move in the same direction (i.e., the dependent variable increases as the independent variable increases).
Study of the allocation of scarce economic resources among alternative uses.
What is the meaning of a graphed plot with a negative slope?
The two variables move in opposite directions (i.e., the dependent variable decreases as the independent variable increases).
Identify the major divisions of the field of economics.
1. Microeconomics; 2. Macroeconomics; 3. International economics.
Identify the "Intercept" on a graph.
The point at which the plotted line intersects the "Y" axis (i.e., at the zero point on the "X" axis).
What are the characteristics of a Market (free-enterprise) economic system?
Distinct entities determine production, distribution and consumption in an open market (e.g., Capitalism).
What is microeconomics?
The economic activities of distinct decision-making entities, including individuals, households and business firms.
What is the role of graphs in economics?
Graphs show the relationship between two variables, usually referred to as the independent and the dependent variables.
What is international economics?
Economic activities that occur between nations and outcomes that result from those activities.
What determines "price"?
The supply of and demand for the commodity being priced.
In an economic context, what makes up compensation?
Payments to individuals as: 1. Wages, salaries and profit sharing for labor; 2. Interest, dividends, rental and lease payments for capital; 3. Rental, lease and royalty payments for natural resources.
List the types of economic resources.
Acquired from individuals as: 1. Labor: human work, skills, and similar human effort; 2. Capital: financial resources (e.g., savings) and man-made resources; 3. Natural Resources: land, minerals, timber, water, etc.
List the characteristics of a free-market economy.
1. Interdependent relationship between individuals and business firms; 2. Production depends on preferences of individuals with ability to pay for goods and services; 3. Production depends on availability of economic resources, level of technology, and how business firms choose to use them; 4. Production depends on sale price being at least equal to production cost.
Describe the relationship between economic resources and compensation in a free-market economy.
Business firms acquire economic resources from individuals (labor, capital and natural resources), who receive compensation in return (wages/salaries, rents, interest, dividends, etc.); individuals use this compensation to acquire goods and services produced by businesses.
Desire, willingness and ability to acquire a commodity.
Describe the income effect as it applies to individual demand.
A given amount of income buys more units at a lower price.
Define "market demand".
The quantity of a commodity that will be demanded by all individuals (and other entities) in the market at various prices during a specified time, ceteris paribus.
What are the factors that change market demand?
1. Size of market; 2. Income or wealth of market participants; 3. Preferences of market participants; 4. Change in prices of other goods and services.
Describe the substitution effect as it applies to individual demand.
Lower-priced items will be purchased as substitutes for higher-priced items.
Define "individual demand".
The quantity of a commodity that will be demanded by an individual (or other entity) at various prices during a specified time, ceteris paribus.
Distinguish between a change in quantity demanded and a change in demand.
A change in quantity demanded is movement along a given demand curve as a result of change in price only. A change in demand is a shift in a demand curve as a result of changes in variables other than price.
Distinguish between a change in quantity supplied and a change in supply.
A change in quantity supplied is movement along a given supply curve as a result of change in price only. A change in supply is a shift of a supply curve as a result of changes in variables other than price.
Supply is the quantity of a commodity (good or service) that will be provided at alternative prices during a specified time.
Describe the principle of increasing cost.
Production costs increase in the short-run as the quantity produced increases, because new resources are not used as efficiently as the resources used previously .