question
economics
answer
the study of the choices consumers, business managers and government officials make to attain their goals, given scarce resources
question
scarcity
answer
although our wants are unlimited, the resources available to fulfill those wants are limited
question
marginal
answer
extra or additional
question
mb=mc
answer
the optimal decision is to continue any activity up to the point where...
question
trade-offs
answer
producing more of one product means producing less of another product
question
opportunity cost
answer
the highest valued alternative that must be given up to engage in that activity
question
centrally planned
answer
economy where most economic decisions are made by the government
question
market
answer
economy where most economic decisions are made by consumers and firms
question
productive efficiency
answer
occurs when a good or service is produced at the lowest possible cost
question
allocative efficiency
answer
occurs when production corresponds with consumer preferences
question
voluntary exchange
answer
a situation that occurs in markets when both the buyer and the seller of a product are made better off by the transaction
question
equity
answer
involves a fair distribution of economic benefits
question
economic variable
answer
something measurable that can have different values (wages)
question
economic models
answer
simplified versions of reality used to analyze real world economic situations
question
positive analysis
answer
concerned with facts; what is known
question
normative analysis
answer
concerned with what ought to be
question
ppf
answer
a curve that shows the maximum attainable combinations of two goods that can be produced with available resources; used to illustrate the tradeoffs that arise from scarcity
question
economic growth
answer
illustrated by an outward shift in the production possibilities frontier
question
comparative advantage
answer
the basis of trade; producing the good or service at the lowest opportunity cost
question
absolute advantage
answer
producing more of a good or service using the same amount of resources as someone else
question
factor markets
answer
markets for the factors of production, such as labor, capital, natural resources and entrepreneurial ability
question
property rights
answer
the rights of individuals and forms to use their property
question
model of demand and supply
answer
the most powerful tool in economics
question
perfectly competitive markets
answer
markets where there are many buyers and sellers, all the products are identical and there are no barriers to entry
question
quantity demanded
answer
the amount of a good or service that a consumer is willing and able to purchase at a given price
question
demand schedule
answer
a table that shows the relationship between the price of a product and the quantity of the product demanded
question
demand curve
answer
a graph that shows the relationship between the price of a product and the quantity of the product demanded
question
market demand
answer
the demand by all consumers of a given good or service
question
substitution effect
answer
the change in quantity demanded that results from a price change making one good more of less expensive relative to another good
question
income effect
answer
the change in quantity demanded of a good that results from the effect of a change in the good's price on consumer purchasing power
question
normal good
answer
good for which the demand increases as income increases
question
inferior good
answer
good for which the demand decreases as income increases
question
quantity supplied
answer
the amount of a good that a firm is willing and able to supply at a given price
question
supply schedule
answer
a table that shows the relationship between the price of a product and the quantity of the product supplied
question
supply curve
answer
a curve that shows the relationship between the price of a product and the quantity of the product supplied
question
law of supply
answer
this states that, holding everything else constant, the quantity of a product supplied increases when the price rises and decreases when the price falls
question
technological change
answer
a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs
question
market equilibrium
answer
occurs where the demand curve intersects the supply curve
question
surplus
answer
when the quantity supplied is greater than the quantity demanded
question
shortage
answer
when the quantity demanded is greater than the quantity supplied
question
elasticity
answer
measures how much one economic variable responds to changes in another economic variable
question
price elasticity of demand
answer
measures how responsive the quantity demanded is to changes in price
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline