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| Deals with aggregate economic variables such as the level of growth of national output, interest rates, unemployment and inflation. Used in fiscal policy and monetary spending. |
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| deals with the behavior of individuals, firms or an industry as well as the markets that these units comprise |
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| a focus of microeconomics that describes how individual economic units optimize scare resources |
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| describes how consumers, based on their preferences, maximize their well being by trading off the purchase of more of some goods for the purchase of less of others. |
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| describes the trade offs a firm makes in deciding the kinds of products they will produce and the resources they use to produce them. Begins with the simple assumption that firms try to maximize their profits. |
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| where buyers and sellers meet and how their behaviors effect prices through their actual or potential interactions |
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| statements that describe relationships of cause and effect. States the facts. |
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| examines questions of what ought to me. |
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| a collection of firms that sell the same or closely related products. |
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| determination of the buyers, sellers and range of products that should be included in a particular market |
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| practice of buying at a low price at one location and selling at a higher price at another location. |
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| Perfectly competitive market |
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Definition
| has many buyers and sellers so that no single buyer or seller has a significant impact on price. |
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| contains many products but individual firms can jointly affect the price. OPEC for example. |
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| price prevailing in a competitive market |
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| a group of produces that acts collectively such as OPEC. |
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| it's boundries, both geographically and in terms of the range of products produced and sold in it. |
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Term
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Definition
| Current dollar price, absolute price, quoted price, market price or marked price of a good unadjusted for inflation |
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| price of a good relative to an aggregate measure of prices; price adjusted for inflation |
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| Measure of the aggregate level price. Used to convert nominal prices to real prices. |
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| Role of prices in market economy |
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| determine what is produced and who will buy it |
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| what a firm is willing to sell under specific circumstances |
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| what people are willing to buy under specific circumstances |
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| Price/Quanity relationship |
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Definition
| a given price will dictate a quanity sold |
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| a specific meaning in economics which is "adjusted for inflation" |
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| teh best choice, given a fixed base of resources |
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Term
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| acquired without effort or paying a price, hasn't been available since the Garden of Eden |
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| have prices, require sweat, have alternative uses |
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| everything else remaining constant |
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| value of a second choice, alternative cost, that which is foregone |
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| Four questions for economics |
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Definition
| what to produce, who to produce, how to produce, for whom to produce. Price determines the answers to these 4 questions. |
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| consumers are free to buy what they choose and determine what is produced |
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| basic elements of any economy: land, labor, capital, entrepreneurships |
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| a schedule of prices and corresponding quanities for which consumers are willing to buy. Inverse relationship, Prices up, quantity of output increases and vice versa. |
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| a schedule of prices and corresponding quanities for which producers are willing to sell |
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Definition
| if price declines, quanity sold increases |
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Term
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Definition
| if price increases, quanity of output increases and vice versa |
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