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Flashcards in Unit 1 Deck (44)
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1

Scarcity

Scarcity is the fact that there are a limited amount of different resources in this world.

2

Choices

Choices are the decisions we make that make us choose what we do with those limited resources.

3

Trade offs

The trade offs are the things we give up by choosing to use our resources in one way over another.

4

Price

Price is the amount of money or services that buyers, spend on a good.

5

Cost

Cost is what the seller/creator of the good pays to produce it.

6

Opportunity cost

Opportunity cost is everything that is given up by choosing one side of a decision.

7

Consumer goods

Consumer goods are any goods that can be readily consumed. An example of this is pizza you buy

8

Capital goods.

A goods that is used in the creation of consumer goods. Like the pizza oven

9

Normative economics

Normative economics is a depiction of how the world should work. It relies of facts, predictions, and hypothesis'

10

Positive economics

Positive economics relies on the cold hard truth and shows how the world actually does work. It relies on numbers and true, provable information

11

Productive efficiency

Being productively efficient just means that the economy is producing at a point along the PPC. This DOES NOT MEAN it is allocatively efficinet

12

Allocative efficiency

is when the economy not only produces on the PPC, but also makes the consumers as well off as possible.

13

Centrally planned economy

A centrally planned economy is an example of communism. In this, the government owns all of the resources and decides the methods of production, what will be produced, and who consumes these goods. provided no monetary gain for anyone and gives no incentive to make high quality goods. A free market economy is one that is run by the individual companies

14

Free market economy

A free market economy is one that is run by the individual companies. It included competition, profit, and the incentive to make better quality goods in a wide variety

15

Product market

The product market is the market that exists when you are selling completed goods to the consumers

16

Resource market

resource market is the market caused by purchasing the goods needed to produce your product.

17

Law of supply

Companies will supply more when there is a higher price

18

Law of demand

People demand more when it costs less

19

Law of diminishing marginal utility

The more you consume of one good, the less it is worth

20

normal good

A good which's consumption increases as income increases
Ex fancy food

21

Inferior good.

Consumption decreases as income increases
Ex top ramen

22

Substitutes

Two interchangeable goods.
As the price of one rises, the demand for the other rises.
Ex pearls and diamonds

23

Compliments

Two goods used in conjunction
As the price of one decreases, the demand for the other will also decrease
Ex cereal and milk

24

Shifters of demand

1. Number of buyers
2. Income
3. Expectations
4. Price of related goods
5.tastes

25

Shifters of supply

1.Number of sellers.
2. Technology
3.resource prices
4. Taxes and subsidies
5. Expectations of producers
6. Price of other goods the firm could produce

26

Expectation of a sale

Decrease inDemand

27

Workers go on strike

Supply decrease

28

Price of a substitute goes up

Demand increases

29

Workers get a wage increase

Decrease in supply

30

Increase in tastes or trends

Demand increase