question
Scarcity
answer
unlimited wants and limited resources
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Factors of production
answer
Land, labor, capital and entreprenuership (materials used for production)
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opportunity cost
answer
Next best choice
question
Economic system
answer
Plan to anwser the three economic questions (who is it for, how is it being made and what are we making)
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PPC
answer
A model that shows maximum combinations of output
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Absolute advantage
answer
Produce the same quanity of a good with few resources or produce more goods then someone
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Comparitave advantage
answer
Produce a good at a lower opportunity cost
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Explicit cost
answer
Tangible materials that have a monetary value
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Implicit cost
answer
Value of your opportunity cost
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Marginial Benefit/ Utility
answer
Additional happiness from consumption of something
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Total utlity
answer
Overall happiness from consumption
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law of diminishing marginal utility
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Increase consumption leads to decreasing marginial benefit
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Quantity Demanded
answer
The specific amount your consumers want at a given price (1 point on the demand curve)
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Demand
answer
The desire, willingness, and ability to buy a good or service
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Quantity supplied
answer
Specific amount a producer is willing to sell (1 point on supply curve)
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Supply
answer
What a producer will sell of a good or service in a market over a range of prices
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Elasticity
answer
The responsiveness of consumers and producers in a market with price changes
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Equilibrium
answer
When QD=QS
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Producer surplus
answer
The value producers save by not having to sell at lowest price
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Consumer surplus
answer
The value consumers save by not having to pay highest price
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Shortage
answer
When QD is greater then QS (QD>QS)
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Price ceiling (shortage)
answer
Government intervention of highest price, below equilibrium
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Price floor (surplus)
answer
Government intervention of lowest price, above equilibrium
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Deadweight loss ( Quanity issue)
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The value lost by missed transactions
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Quota
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Quanity restriction or limit
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Tariff
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A tax on imported goods
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Production Function
answer
The function that gives the quantity of a firms outputs based on the quantity of its inputs
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Fixed
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Doesn't change
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Variable
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Can be changed
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Plant capacity
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A firms maximum potential level of production
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Short-run (nothing to do with time)
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Period of time that has fixed inputs and the firms can't alter its plant capacity
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Long-run ( nothing to do with time)
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Period of time in which all inputs can be changed and the firm can alter its plant capacity
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Total Product Curve
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The graph showing production function
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Economies of scale
answer
Increasing output causeing LRATC to decline
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Average (physical) product (AP)
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Average quantity of output produced by one unit of variable input, often labor
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Total Product Curve
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The graph of the production function with respect to only variable inputs
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Fixed Costs (FC)
answer
Do not vary with changes in output
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Variable Costs (VC)
answer
Change with the level of output
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Total Cost (TC)
answer
Sum of fixed and variable costs
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Marginal Costs (MC)
answer
Additonal cost of producing one more unit of input (Change in TC/ Change in Q)
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Average Variable Costs (AVC)
answer
VC (total cost)/ Q (Quantity of output)
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Average Total Cost (ATC) or (AC)
answer
TC( Total Cost)/ Q ( Quantity of output)
AFC + AVC =ATC
AFC + AVC =ATC
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