what is economics?
the study of how individuals and societies choose to allocate scarce resources, why they choose to allocate them that way, and the consequences of those decisions
what is capital?
things produced to produce other things (tools, not financial assets)
what is microeconomics?
a social science that focuses on choices made by individual actors
what is macroeconomics
a social science that focuses on the overall ups and down in the economy
what are positive economics?
a statement that can be tested in theory regardless if agreeable or not
what are normative economics?
a statement that speaks from morals, opinions, and ethics and cannot be tested
machinery in a factory is an example of _______
capital
what is ceteris paribus?
a Latin phrase meaning “all else equal” (all things are equal)
what is scarcity?
it is essential to economics and is the fact that there is a limited amount of resources to satisfy unlimited wants
what is opportunity cost?
the desirable alternative given up as a result of a decision
“people who aren’t working, even though they could work, is wrong and unfair” is a _________ statement
normative
“the price of milk should be $6 a gallon to give dairy farmers a higher living standard and to save the family farm” is a _________ statement
normative
“programs like welfare reduce the incentive for people to work” is a ________ statement
positive
“raising taxes on the wealthy to pay for government programs grows the economy” is a ________ statement
positive
what is absolute advantage?
when a producer, given the same amount of time and resources, can produce more of a given item than another producer
what is comparative advantage?
when a producer has a lower opportunity cost than another producer
“raising taxes on the wealthy slows economic growth” is a ________ statement
positive
what is a free resource?
something that has abundant amounts where everyone gets as much as they like
what is law of demand?
as prices increase, the quantity demanded decreases. as prices decrease, the quantity demanded increases
what is quantity demanded?
a movement along the curve
caviar is an example of a _______________
scarce resource
what are substitutes?
when the rise in price of one good leads to an increase in demand of another good
what are complements?
goods that are consumed together
what are normal goods?
goods that increase in its demand due to a rise in consumers’ income
what are inferior goods?
goods that decrease in its demand due to a rise in consumers’ income resulting in normal goods becoming the superior
what is the law of supply?
the higher the price, the more producers want to produce
working in a factory is an example of _____
labor
planting seeds is an example of _____
labor
harvesting crops is an example of _____
labor
farms are an example of ____
land
natural resources such as minerals, oil, air, and energy are all examples of ____
land
what is a recession?
when a country’s output and employment is falling
what is unemployment?
the measure of all the people without a job, but actively looking for one
what is inflation?
a sustained increase in the general price level in an economy
natural resources such as minerals, oil, air, and energy are all examples of ____
land
the great depression is an example of a ______
trough
the ______________ crisis of 1923 in Germany (after ww1) is an example of _________
hyperinflation;inflation
trade-off is measured in terms of _______________
opportunity cost
if an economy is _________ then it means that no missed opportunities anywhere along the curve
efficient
a production possibilities curve is ________ when the opportunity cost does not ______ as you move along the curve
straight;change
what table shows how much of a particular good or service people are willing to buy at different price points?
demand schedule
the ____________ is a graph of the demand schedule
demand curve
the ____________ is a graph of the demand schedule
demand curve
change in _________________ is only affected by price
quantity demanded
change in ______ indicates an increase in demand at ___________
demand;every price
as demand increases, the curve shifts to the _____
right (rightward shift)
as demand decreases, the curve shifts to the ____
left (leftward shift)
as demand decreases, the curve shifts to the ____
left (leftward shift)
a change in the price of related goods or services (complements/substitutes) is an example of…
factors that shift the demand curve
changes in income are an example of…
factors that shift the demand curve
changes in taste are an example of…
factors that shift the demand curve
changes in expectations are an example of…
factors that shift the demand curve
changes in the number of consumers are an example of…
factors that shift the demand curve
going to chic-fil-a when getting more income instead of going to mcdonalds is an example of…
normal goods (chic-fil-a would be the normal good)
everyone wanting to buy fidget spinners in 2017 but now they are considered “dead” and no longer in high demand is an example of…
tastes (people no longer are interested in fidget spinners)
the price of gummy bears increasing so the demand in gummy worms increases is an example of…
substitutes (more people are willing to buy gummy worms at any price)
people waiting until july to buy a macbook laptop because apple decreases the price in july is an example of…
expectations (not buying a laptop because of an expected price drop)
people waiting until july to buy a macbook laptop because apple decreases the price in july is an example of…
expectations (not buying a laptop because of an expected price drop and changing the demand of laptops in june)
a surge in population thus more demands (wantholes) is an example of…
changes in number of consumers (an increase in population=more consumers)
a surge in population thus more demands (wantholes) is an example of…
changes in number of consumers (an increase in population=more consumers)
TRIPE (the factors that shift demand curve)
tastes, related goods, income, population, expectations
changes in the input prices are an example of…
factors that shift the supply curve
changes in the prices of related goods are an example of…
factors that shift the supply curve
changes in technology are an example of…
factors that shift the supply curve
changes in expectations are an example of…
factors that shift the supply curve
changes in the number of producers are an example of…
factors that shift the supply curve
changes in the number of producers are an example of…
factors that shift the supply curve
to make gummy bears, producers need inputs such as gelatin so if the price of gelatin rises producers are more likely to produce less gummy bears which is an example of…
changes in input prices
cars and gasoline are examples of…
complements
if a producer can create new technology that can make their product cheaper so they are more likely to produce more of the product is an example of…
changes in technology
since gasoline demand spike in the summer, so gas manufacturers (producers) hold on to the excess supply of gas during the winter and spring and wait until the summer to bring the gas to market. which is an example of…
changes in expectations
since gasoline demand spike in the summer, so gas manufacturers (producers) hold on to the excess supply of gas during the winter and spring and wait until the summer to bring the gas to market. which is an example of…
changes in expectations
if there are more companies (producers) making gummy bears, then there are more gummy bears supplied to the world, which is an example of…
changes in the number of producers
when demand for a good or service increases, then the _________________ will rise and the ____________________ will rise
equilibrium price;equilibrium quantity
when supply of a good or service _________, the equilibrium price _________ and the equilibrium quantity _________
decreases;inccreases;decreases
when demand _________ and supply _________, then the equilibrium price will ________
increases;decreases;increase
what is the total quantity demanded across all consumers in a market for a given good?
market demand
what is the total quantity demanded across all consumers in a market for a given good?
market demand
what is the business cycle stage that follows a recession?
recovery
what is the low point of the GDP before it begins to turn upward?
trough
what is the low point of the GDP before it begins to turn upward?
trough
what is a business cycle?
the upward and downward movement levels of the GDP
what is the price in a market at which the quantity demanded and the quantity supply of a good are equal to one another?
equilibrium price
__________________ is determined by the intersection of the supply and demand curves
market equilibrium
what is the quantity that will be sold and purchased at the equilibrium price?
equilibrium quantity
______________ is the relationship between how much money a country pays for its imports and how much it brings from exports
terms of trade
what is the method of production whereby a producer focuses on a production of a good for the sake of efficiency?
specialization
what is an industry where input prices do not change when industrial output changes?
constant costs
_____ is a general tendency for the value of a variable to rise or fall.
trend
