✨Economics Test 1✨ Flashcards
(25 cards)
labor
physical/mental talents of people which help produce goods and provide services
capital
the investment goods that aid the production process
command economy
government makes all the economic decisions
market economy
individual consumers and producers make the basic economic decisions based on supply and demand
macroeconomics
concerned with economy as a whole or with basic subdivisions
microeconomics
concerned with specific economic units and detailed consideration of the behavior of these units
standard of living
amount of goods and services that can be purchased and the amount of leisure time
(the best measurement of where society is at)
inflation
general rise in price of goods and services
efficiency
producing the maximum possible output from available resources
production possibilities curve
shows possible combinations of the two types of goods (services) that can be produced when available resources are employed (used) fully and efficiently
law of demand
price goes up –> demand goes down
price goes down –> demand goes up
(inverse relationship)
law of supply
price goes up –> supply goes up
price goes down –> supply goes down
(direct relationship)
consumers
people who buy/purchase goods and services
entrepreneurs
risk takers who start businesses
opportunity cost
the value of the best alternative that you must pass up (opportunity lost)
-can be measured in $
gross domestic product
measures the amount of goods and services an economy produces within a year
Karl Marx
Wrote Das Kapital
-capitalists exploit the workers
(communist ideas)
Adam Smith
Wrote book Wealth of Nations
-explains the principles of capitalism
(father of something)
shortage
demand is greater than supply
surplus
supply is greater than demand
What are the steps to figuring out the graphs?
1: does S or D change
2: does it increase or decrease
3: find the original equilibrium price and quantity
4: find the new equilibrium price and quantity
5: compare (increase/decrease, equilibriums)
What will cause the curve to shift?
1: changes in resource availability
2: change in stock of capital goods
3: technological change
What factors shift the D curve?
1: number of consumers in the market
2: tastes/preferences of consumers
3: income of consumers
4: price of related goods
5: consumer expectations with respect to future prices and income
What factors shift the S curve?
1: changes in technology
2: change in resource prices
3: number of sellers
4: changes in taxes/subsidies
5: change in price of other goods
6: a change in expectations for future prices
