Microeconomics 2020- Fink

The study of how people seek to satisfy their needs and wants by making choices

Limited quantities of resources to meet unlimited wants

economic good; good for which you can NOT get all you want at zero cost

Goods that are unlimited in supply and which therefore have no opportunity cost

monetary value of a product as established by supply and demand

the sacrifice associated with making a choice; in a standard market transaction it is paid by the producer

out of pocket, monetary payments

what you give up when making a choice

all things used in producing goods and services

natural, human, capital, entrepreneurship

explicit, implicit/opportunity, economic

physical and mental talents used in production

land, oil, water, lumber, etc.

all manufactured goods used in production

ability to combine other resources into valued outputs

the increase in total cost that arises from an extra unit of production

Ability of a good or service to be useful and give satisfaction to someone.

a statement about economic behavior or the economy that enables prediction of the probable effects of certain actions

a simplified representation of how something works

a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade

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

consumers buy more of a good when its price decreases and less when its price increases (inverse relationship)

the quantity of a good or service that consumers are willing and able to buy

the amount of a good or service that a consumer is willing and able to purchase at a given price

Goods and services that can be used for the same purpose. (price and demand move TOGETHER)

two goods that are bought and used together in consumption. (price and demand move OPPOSITE)

a good that consumers demand more of when their incomes increase (move TOGETHER)

a good that consumers demand more of when income is down (move OPPOSITE)

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

the price of a good and the quantity supplied are directly (positively) related

the amount of a good that sellers are willing and able to sell at a specific price

a graph of the relationship between the price of a good and the quantity supplied, shows the minimum producers are willing to accept as payment for a certain quantity

the production process of changing resources into goods. when technology improves, supply increases

the price at which the quantity demanded equals the quantity supplied

Demand or supply for which the elasticity coefficient is greater than 1;a measure of the responsiveness of quantity demanded or quantity supplied to a change in one of its determinants (fast food, cereal)

a measure of the sensitivity of demand to changes in price

Demand or supply for which the elasticity coefficient is infinity; a horizontal line reflecting a situation in which any price increase reduces the quantity demanded to zero; the elasticity has an absolute value of infinity

Demand or supply for which the elasticity coefficient is equal to 1; means that the percentage change in the quantity demanded or supplied is equal to the percentage change in price.

Demand or supply for which the elasticity coefficient is less than 1; Describes demand that is not very sensitive to a change in price. (gas, vapes)

Demand or supply for which the elasticity coefficient is equal to 0; quantity does not respond at all to changes in price

the percent change in the quantity of a good demanded when a consumer's income changes divided by the percent change in the consumer's income

income, price of related goods, expectations of future prices, number of buyers, tastes and preferences

1. substitutability
2. proportion of income
3. luxury vs. necessity
4. time

input/resource prices, technology, taxes, expectations of future prices, number of sellers

the allocation of goods among consumers using prices

when changes in the price of one product affect the demand for another item

the total amount of money a firm receives by selling goods or services (TR = P x Q)

explicit cost + implicit cost

Qd-Qs units

Qs-Qd units

change in quantity demanded/original quantity demanded

change in price/original price

Ed = % change in Qd/ % change in price

(change in Qd/ average Qd) / (change in price/ average prive)

A change in demand is when the whole curve shifts and a change in quantity demanded is movement along the demand curve due to a change in price. Price Doesn't shift the curve.

Change in supply means shift of whole curve, Change in the Quantity Supplied means shift along the curve

Elastic: describes demand that is very sensitive to a change in price

Inelastic: Describes demand that is not very sensitive to a change in price

elasticity decreases as quantity increases

consumers, company, competitors, conditions cause shifts along the supply and demand curves

a visual model of the economy that shows how dollars flow through markets among households and firms