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MPH > Economics- Midterm > Flashcards

Economics- Midterm Flashcards

(52 cards)

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1
Q

Diminishing marginal product

A

the property whereby the marginal product of an input declines as the quantity of the input increases

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2
Q

Production possibilities frontier

A

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

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3
Q

Market

A

A market is a 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 product.

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4
Q

competitive market

A

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

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5
Q

Quantity demanded

A

Amount of a good that buyers are willing and able to purchase

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6
Q

Law of demand

A

All other things being equal, the QUANTITY demanded of a good FALLS when the PRICE of the good RISES

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7
Q

which way does the demand graph slope? Why?

A

Downwards, because other things being equal, lower P= greater Q demanded

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8
Q

What are some variables that SHIFT the demand curve?

A

1) Income
a. Lower income= less money you have to spend in total→ therefore less to spend on goods
2) Price of related goods
a. Substitutes
i. Fall in price of one good reduces demand for another good
ii. E.g. almond milk and cow’s milk
b. Complements
i. Fall in price of one good raises demand for another good
ii. E.g. cereal and milk
3) Tastes
4) Expectations
a. Expectations about the future may affect demand for a good or service today
b. E.g. if you expect to earn a higher income next month→ you may choose to save now and spent more later
5) Number of buyers
a. The greater the number of buyers, the Q demanded in the market would be HIGHER at every price and market demand would INCREASE

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9
Q

What causes movement along the demand curve?

A

A change is price

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10
Q

quantity supplied

A

The amount of a good that sellers are willing and able to sell

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11
Q

Supply curve

A

A graph of the relationship between the price of a good and the quantity supplied

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12
Q

Equilibrium

A

A situation in which the market price has reached the level at which quantity supplied equals quantity demanded

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13
Q

Equilibrium quantity

A

The quantity supplied and the quantity demanded at the equilibrium price

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14
Q

Equilibrium price

A

The price that balances quantity supplied and quantity demanded

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15
Q

Efficiency

A

The property of society getting the most it can from its scarce resources

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16
Q

Opportunity cost

A

Whatever must be given up to obtain some item

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17
Q

Market failure

A

A situation in which a market left on its own fails to allocate resources efficiently

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18
Q

Externality

A

The impact of one person’s actions on the well being of a bystander

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19
Q

Market power

A

The ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

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20
Q

Productivity

A

The quantity of goods and services produced from each unit of labor input

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21
Q

Substitutes

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A

Two goods for which an increase in the price of one leads to an increase in the demand for the other

22
Q

Complements

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A

Two goods for which an increase in the price of one leads to a decrease in the demand for the other

23
Q

Surplus

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A

A situation in which quantity supplied is greater than quantity demanded

24
Q

Shortage

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A

A situation in which quantity demanded is greater than quantity supplied

25
Budget constraints
The limit on the consumption bundles that a consumer can afford
26
Marginal rate of substitution
The rate at which a consumer is willing to trade one good for another. The marginal rate of substitution between two goods depends on their marginal utilities.
27
Indifference curve
A curve that shows consumption bundles that give the consumer the same level of satisfaction
28
Total revenue
The amount a firm receives for the sale of its output
29
Total cost
The market value of the inputs a firm uses in production
30
Profit
Total revenue minus total cost
31
Explicit costs
Input costs that require an outlay of money by the firm
32
Implicit costs
Input costs that do not require an outlay of money by the firm
33
Fixed costs
Costs that do not vary with the quantity of output produced
34
Variable costs
Costs that vary with the quantity of output produced
35
Average total costs
Total cost divided by the quantity of output
36
Average fixed costs
Fixed cost divided by the quantity of output
37
Average variable costs
Variable cost divided by the quantity of output
38
Marginal cost
The increase in total cost that arises from an extra unit of production
39
Diminishing marginal utility
The more of the good the consumer already has, the lower the marginal utility provided by an extra unit of that good.
40
Marginal utility
The extra utility gained from consuming one more unit of a good, holding others constant. Utility is a measure of the satisfaction from consuming goods.
41
Marginal rate of transformation
The slope of the production possibilities curve, and the rate at which society can transform one good into another.
42
Marginal Rate of Technical Substitution
The amount of one factor of production given up per unit increase in another factor of production, while maintaining the same level of output.
43
Production function
The relationship between the maximum output that can be produced corresponding to any combination of factor inputs.
44
Price elasticity of demand
The percentage change in quantity demanded resulting from a 1 percent change in price.
45
Price elasticity of supply
The percentage change in quantity supplied resulting from a 1 percent change in price.
46
Perfect competition
A market structure with (1) numerous buyers and sellers, (2) perfect information, (3) free entry and exit, and (4) a homogeneous product
47
Deadweight loss
A measure of the net loss of society’s welfare resulting from a misallocation of resources, usually situations in which the marginal benefits of a good do not equal marginal costs
48
Public good
A good (e.g., national defense) that no one can be prevented from consuming, (i.e., nonexcludable) and that can be consumed by one person without depleting it for another (i.e., nonrival). The marginal cost of providing the good to another consumer is zero
49
Monopoly
Situations in which a firm faces a negatively sloped demand curve. In a pure monopoly, no other firm produces a close substitute for the firm’s product. The demand curve facing the monopolist is the market demand curve.
50
Monopsony
Situations in which a firm faces a positively sloped supply curve in the product or factor market because it is the only buyer. The supply curve facing the monopsonist is the market supply curve.
51
Technical efficiency
occurs when the firm produces the maximum possible sustained output from a given set of inputs
52
Allocative efficiency
situations in which either inputs or outputs are put to their best possible uses in the economy so that no further gains in output or welfare are possible

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