Term
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Definition
Oppertunities the individual, firm, or government must forego to make the desired expediture.
What you didn't get through your decision |
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Term
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Definition
| Two companies benefit in trade. |
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Term
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Definition
The (sometimes unnoticed) gain or loss.
Ex: If a plane ticket per passenger drops from $300 to $200, there is nor real loss because either way the plane must fly. |
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Term
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Definition
External third parties effected by a trade.
Ex: Powerplant (seller) gives power to neighborhood (buyer), but pollution effects fish and fisherman(third party) |
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Term
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Definition
Exports and Imports make up a small portion of an economy's GDP.
Ex: USA |
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Term
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Definition
| Two variables which rise or fall together |
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Term
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Definition
| Representation of a theory used to find cause and effect. |
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Term
| Gross Domestic Product (GDP) |
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Definition
Measure of an economy's size, the total amount producted within 1 year within an economy's borders.
Ex: Germany producing cars in USA |
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Term
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Definition
| Allocation of scarce recources to unlimited wants. Studies society as a whole at individual level. |
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Term
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Definition
| System of corordinating society's consumption and production activities. |
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Term
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Definition
Study of the individual's decisions and how those decisions interact.
Ex: Household (consumer) and firms (producer) |
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Term
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Definition
Study of whole society's ups and downs in the economy.
Ex: Unemployment, stocks |
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Term
| What are the seven crucial concepts of economics? |
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Definition
1) How much does it REALLY cost?
ex: oppertunity cost, what you didn't get
2)Attempt to restrict the economy usually backfires.
ex: Price floor/ ceiling
3)Principle of comparative advantage.
ex: basis of trade, everyone should do what they're best at.
4)Trade is a win-win situation.
ex: Both benefit from voluntary trade.
5) Imporance of Analysis at margin
ex: all or nothing (eat or dont), on average decision (daily calorie intake), or marginal decision (how much more to eat)
6) Externalities (neative or positive)
ex: Farmer (producer) sprays fields (consumers buy) but chemicals poison water (drinkers= external)
7)Trade off b/t efficiency and equallity.
ex: handycap parking spaces are not efficient but diasabled are equal. |
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Term
| Gross National Product (GNP) |
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Definition
Total amount of goods and services produced by citizens in one year.
Ex: Ford cars produced in USA |
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Term
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Definition
| Goods and services produced in your economy and sold to another. |
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Term
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Definition
| Goods and services produced in another economy and and sold here. |
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Term
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Definition
| Exports and imports make a large portion of the economy's GDP |
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Term
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Definition
| Rapid increase in prices, growth of product/ ecomomy. |
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Term
| Explain the circular flow diagram |
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Definition
| Households give expenditure (income) to output markets (grocery store) and recieve goods and services. Output markets gives sales reciepts tp firms (general mills) and recieve goods and services. Firms give wages and interests to input markets (oat farm) and receive labor and capital. Input markets give income to households and receive larbor and capital. |
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Term
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Definition
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Term
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Definition
Instruments provided bu nature or people to produce goods and services.
Ex: Land, labor, capital |
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Term
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Definition
| Society's decision to divide scarce recources. |
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Definition
| Goods and services produced by a firm |
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Term
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Definition
| Recources used by a firm to produce outputs. |
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Term
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Definition
| a firm that does waste any of its available recources and produces max outputs technology allows. |
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Term
| Production possibilities frontier (PPF or curve- PPC) |
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Definition
Displays various possible combinations of outputs a firm can produce given technology and available recources.
Ex: Any point along the line is efficient, any point within the line is possible but inefficient, any point outside the line is impossible. |
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Term
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Definition
Amount if good demanded at a given price.
Movement along this curve is based on price. |
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Term
| What factors shift demand? |
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Definition
| Income, population, consumer preferance, and prices/ availability of goods. |
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Term
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Definition
| Displays quantity demanded at each specific price. |
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Term
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Definition
| Lists the quantity demanded of a good at each specific price. |
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Term
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Definition
Displays the supply schedule
Movement along the curve is only due to the price of that good (change in quantity supplied- amount supplied at a given price) |
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Term
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Definition
| Lists the quantity supplied for each specific price |
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Term
| What are supply shifters? |
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Definition
1) Number of firms (more firms means more supplied)
2) Technological processes (more effiencency means more supply)
3) Prices of inputs (high imput costs means less supply)
4) Prices of related goods |
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Term
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Definition
| The point of the graph when supply is th same as demand, quantity supplied equals quantity demanded. |
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