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Flashcards in Test 1 Deck (69):
1

Scarcity

The limited nature of societys resources
limited so cannot produce everything people want

2

economics

the study of how society manages its scarce resources

3

efficiencey

Society is getting the maximum benefits from its scarce resources
The size of the economic pie

4

equity

Distributing economic prosperity uniformly among the members of society
How the pie is divided into individual slices

5

opportunity cost

whatever must be given up to obtain some item
measure of trade offs between the two goods that each producer faces

6

Rational People

Systematicallly and purposefully do the best they can to achieve their objectives
Given available opportunities

7

Marginal Change

Small incremental adjustments to a plan of action

8

Incentive

something that induces a person to act
Like higher price - buyers consume less; sellers produce tomorrow

9

Market Economy

allocation of resources through decentralized decisions of many firms and households as they interact in markets for goods and serves GUIDED BY PRICES AND SELF INTEREST

10

Property Rights

ability of an individual to own and exercise control over scarce resources

11

Market Failure

Situation in which the market left on its own fails to allocate resources efficiently

12

Externality

impact of one person's actions on the well-being of a bystander

13

Market Power

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

14

Productivity

Quantity of goods and services produced from each unit of labor input
Higher P -> higher standard of living
Growth Rate of nations productivity determines rate of its average income

15

Inflation

an increase in the overal level of prices in the economy

16

Business Cycle

Fluctuations in economic activity such as employmetn and preduction

17

Circular Flow Diagram

Visual model of the economy showing how dollars flow through markets among households and firms
Firms- market for factors of production
Households - market for goods and services

18

Production Possibilities Frontier

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

19

Microeconomics

the study of how households and firms make decisions and how they interact in the markets

20

Macroeconomics

the study of economy-wide phenomena including inflation, unemployment, and economic growth

21

Positive Statements

descriptivie
attempt to describe would as it is
CAN BE PROVEN OR DISPROVEN

22

Normative Statements

prescriptive
attempt to prescribe how the world should be

23

absolute advantage

the ability to produce a good using fewer inputs than another porducer
in most of our examples whoever can make the most in the same amount of time

24

comparative advantage

ability to produce a good at a lower opportunity cost than another producer
specialize according to comparative advantage - make whatever you have lower opp cost when trading

25

imports

produced abroad and sold domestically

26

exports

goods produced domestically and sold abroad

27

market

a group of buyers and sellers of a particular good or service

28

competitve market

many buyer and sellers with negligible impact of market price, price and quantity determined by buyers and sellers

29

perfeclty competitve market

all goods exactly the same
so many buyers and sellers that there is no influence on market price
PRICE TAKERS

30

monopoly

only seller in the market, sets the price

31

quantity demanded

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

32

law of demand

other things equal, when the price of a good rises the quantity demanded falls and when the price falls the demand rises

33

demand schedule

a table of relationship between the price of a good and quantity demanded

34

demand curve

a graph of relationship between the price of a good and quantity demanded

35

market demand

sum of all individual demands for a good or service

36

normal good

other things constant, an increase in income leads to an increase in demand

37

inferior good

other things constant, an increase in income leads to a decrease in demand

38

substitutes

two good that an increase in the price of one leads to an increase in the demand for the other

39

complements

two goods that an increase in the price of one leads to a decrease in the demand for the other or opposite

A decrease in price of bagel leads to increased demand for cream cheese

40

quantity supplied

amount of a good sellers are willing and able to sell

41

law of supply

other things equal, when the price of a good rises the quantity supppilied of the good also rises and when the price falls the quantity supplied falls as well

42

supply schedule

table that shows relationship between the price of a good and the quantity supplied

43

supply curve

a graph that shows the relationship between the price of a good and the quantity supplied

44

market supply

sum of supplies of all sellers for a good or seller

45

equilibrium

various forces are in balance
quantity supplied = quantity demanded

46

equilibrium price

balances qauntity suplid and quantity demanded
market-clearing price

47

equilibrium quantity

quantity suppplied and quantity demanded at the equilibrium price

48

surplus

Quantity supplied > quantity demanded
puts downward pressure on price to increase demand

49

shortage

quantity demanded > quantity supplied
upward pressure on price to decrease demand

50

10 principles of economics

1 - people face trade offs
2 - cost is what u give up to get
3 - rational people think at the margin
4 - people respond to incentives
5 - trade can make everyone better off
6 - markets are usually a good way to organize economic activity
7 - governmetns can sometimes improve market outcomes
8 - a country's standard of living depends on its ablity to produce goods and services
9 - prices rise when teh government prints too much money
10 - society faces a short-run trade off between inflatino and unemployment

51

difference between macro and micro

micro is for singly firms or individual decisions while micro is like global or national scale

52

difference between positive and normative

postive describe and can be proven/disproven while normative say SHOULD and cant be proven or disproven

53

how to calculate opportunity cost

i think just compare the times it takes to make and its how many of the other you could make in the time it takes to make it

54

can someone have the absolute and comparative advantage in two activities

they could have absolue it both but not comparative in both

55

what are the boundaries of the price of trade

has to lie between opportunty cost?

56

what is a price taker

you arent setting the price the other side of the market is ??

57

Factors of demand

income - normal vs inferior goods
prices of related goods - subs and comps
tastes
expectations - higher prices or incomes
numbers of buyers - more = more demand

58

factors of supply

input prices - high input prices -> decrease in supply
technology - new tech lowers costs increases supply
expectations - expect higher prices (decrease current supply to stock up and sell higher)
number of sellers - more sellers more supply

59

difference between demand and quantity demanded

quantity demanded is what buers are williing and able to purchase like a specific amount but demand itself is the relationship between price and QD

60

how many non farm payroll jobs were added in december

148,000 ok,, but 250k is ideal

61

what was unemployment rate in December

unchanged at 4.1% this is low (good)

62

what was labor force participation rate in December

62.7% its ok, 65 is ideal

63

who is the new chairmen of the FED

Jerome Powell

64

what does NAFTA stand for

North American Free Trade Agreement

65

what 3 countries are in NAFTA

Canada, US, Mexico

66

what percent did home sales increase in 2017

1.1% best since 2006

67

how much did the median sales price for existing homes increase? fro 16-17

$246,800, up 5.8% not bad, potential bubble

68

4 Qt 2017 GDP growth?

a 2.6% annual rate

69

what was home ownership rate as of hte 4th qt of '17

64.2% up from 63, but 65 is better