SMU Microeconomics Exam 1 Wheaton

The study of choice when dealing with scarcity

Not having enough to fill all wants and needs

Getting the most benefit for the choice

Each participant gets an equal ammount

What you give up to get something else

something that induces a person to act

The sacrifice of some or all of one economic goal, good, or service to achieve some other goal, good, or service.

a decision made at the "margin" of an activity to do a bit more or a bit less of that activity.

analysis that involves comparing marginal benefits and marginal costs

show combinations of 2 goods or services that can be produced with given inputs

Input that goes into Firms (land labour capital and entreprenuership_

a model that illustrates how participants in markets are linked

demanders of goods and services

suppliers of goods and services

the governing body of a nation, state, or community.

households are sellers and firms are buyers

a market in which firms are sellers of what they produce and households are buyers

This IS, those ARE

This should BE

cause and effect

Rise over run

Graph of Linear is straight, graph of non linear is curved

Positive: Both go up, Negative: One goes up other goes down

the ability to produce a good using fewer inputs than another producer

the ability to produce a good at a lower opportunity cost than another producer

goods and services purchased from other countries

Goods and Services sold to other countries

A market in which both buyers and sellers are "price takers" meaning they can not influence the price

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

the amount of a good that buyers are willing and able to purchase at each price

The relationship between the quantities buyers demand at each of the price, a line or curve on a graph

All else equal, the quantity demanded by a buyer decreases as the price increases

1. Changes in Income, Price of Related Goods, 3. Changes in tastes or preferences 4. Expectations (future prices and income) 5. Number of Buyers

the change in quantity demanded brought about by a change in price

the demand curve that shows the quantities demanded by everyone who is interested in purchasing the product

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

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

The relationship between the quantities suppliers sell at each of the price, a line or curve on a graph

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

1. Changes in input prices, 2. Changes in Technology 3. Expectations (Future demand changes or Input Prices) 4. Number of Sellers

the change in quantity supplied brought about by a change in price

the demand curve that shows the quantities supplied by sellers at each price

the quantity supplied and the quantity demanded at the equilibrium price

the price at which the quantity demanded equals the quantity supplied

A situation in which quantity supplied is greater than quantity demanded

A situation in which quantity demanded is greater than quantity supplied

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price

describes demand that is very sensitive to a change in price

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

a given change in price causes a proportional change in quantity demanded

quantity does not respond at all to changes in price (E=0)

flat demand curve; consumers are perfectly price sensitive

the total amount of money a firm receives by selling goods or services, Price x Quantity