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| Anything from which you recieve utility or satisfaction. |
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| The satisfaction you get from a good. |
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| Antyhing from which yuo recieve disutility or dissatisfaction. |
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| The dissatisfaction you get from a bad. |
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| All natural resources such as, minerals, forests, water, and unimproved land. |
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| The physical and mental talents people contribute to the production process. |
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| Produced goods that can be used as inputs for futher production. (Machinery, tools, computers) |
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| The particular talent that some people have for, organizing resources, seeking new business oppurtunities, developing new ways of doing things. |
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| Wants are greater than the limited resources. |
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| The second best option that is sacrificed for a decision. (Going to class instead of taking a nap, the nap is the second best option, so it is the opportunity cost) |
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| A means for deciding who gets what of the available resources, or goods. ($) |
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| The benefits of consuming and additional unit of good. The initial consumption of the good yields the highest benefit. Marginal benefits decrease with each addition good consumed. |
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| The costs connected to consuming an additional unit of a good or undertaking one more unit of an activity. |
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| Decision made by weighing the MARGINAL BENEFITS against the MARGINAL COST |
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| A POSTIVE or NEGATIVE outcome that was not anticipated. |
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| The study of "what is" in economic matters. Cause -> Effect (How things work) |
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| The study of "what should be" in economic matters. (decide how it should be) |
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| Human behavior and choices as they relate to relatively small units - an individual, a business firm, and industry, a single market. |
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| Human behavior and choices as they relate to highly aggregated markets (goods or services markets) or the entire community. |
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| Production Possibilities Frontier (PPF) |
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| Possible combinations of two goods that can be produced in a certain period of time under the conditions of a give state of technology and fully employed resources. |
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| Law of Increasing Opportunity Costs |
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| As more of a good is produced, the opportunity costs of producing that good increase. |
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| PPF - Constant Opportunity Costs |
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| If we produce 50k computers we are out of resources to make tvs. If we produce 30k computers we have enough resources to make 20k tvs. (Not using all resources is possible but inefficient) |
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| PPF - Increasing Opportunity Costs |
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| More realistic than constant opportunity cost. Moving from A -> B is an opportunity cost of 10k computers. B -> C is an opportunity cost of 15k computers. This is possible because of specialized labor forces. |
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| The condition where the maximum output is produced with the given resources and technology. |
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| Less than the maximum output is produced with given resources and technology. |
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| Third Party Effects on Trade |
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Costs -> Negative effects of trade (gov't restricting what can be traded_
Benefits -> Positive effects of the trade. (cash for clunkers) |
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| The situation where someone can produce a good at lower opportunity cost than someone else can. |
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| Producing goods in which you have a comparative advantage. |
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| Phrase that means before. (before a trade) |
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| Phrase that mean after. (after a trade) |
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| Any place people come together to trade. (Soda machine, EBAY) |
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| People wanting, and being able to buy goods and different prices during a specific time period. (a sorround sound system on rollback right after refund checks come out) |
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| As the price of a good rises, the quantity demanded of the good falls, and as the price of a good falls, the quantitydemnaded of the good rises. (price of pizza goes up the less pizza is consumed / price of pizza goes down the more pizza is consumed) |
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| Assumption used to examine the effect of one influence on an outcome while holding all other influences constant. |
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| The numerical tabulation of the QUANTITY DEMANDED of a good at different prices. (numerical representation of the law of demand) |
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| The price of a good in money terms. |
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| The price of a good in terms of another good (DVD player = 1/4 of a tv, TV = 4 DVD players) |
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| Law of Diminishing Marginal Utility |
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| The marginal utility or satisfaction gained by consuming equal succesive units of a good will devline as the amount consumed increases |
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| Factors Causing a Shift in the Demand Curve |
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| Income, Preferences, Prices of substitue goods, Prices of complementary goods, Number of buyers, Expectations of future prices. |
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| A good the demand for which rises (falls) as income rises (falls). (everyday goods) |
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| A good the demand for which falls (rises) as income rises (falls). (broke college student bys Dr. Thunder; Rich College Professor buys Dr. Pepper) |
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| a good the demand for which does not change as income rises or falls. (soap...not affected by income) |
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| Two goods that satisfy similar needs or desires. If two good are substitues, the demand for one rises as the price of the other rises (or the demand for one falls as the price of the other falls) - ex. If they charded more for Dr. Pepper than Mtn Dew more Pepper fans will buy Mtn Dew...Great Value vs. Name Brand |
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| Two goods that are used jointly in consumption. If two good are complements, the demand for one rises as the prive of the other falls (or the demand for one falls as the price of the other rises). ex. golf clubs and golf balls, if the price of golf clubs rises the demand for golf balls falls |
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| The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period. |
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| As the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls. |
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| The graphical representation of the law of supply, which states that price and quantity supplied are directly related. |
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| If you only have 500 seats available you can only sell 500 tickets. (graph has a vertical slope) |
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| The numerical tabulation of the quantity supplied of a good at different prices. (a numerical representation of the law of supply) |
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| Factors that Cause the Supply Curve to Shift |
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| Prices of relevant resources, technology, number of sellers, expectation of future prices, taxes and subsidies, gov't restrictions. |
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| Rightward shift on the graph is an increase in supply. Leftward shift on the graph is the decrease in supply. |
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| Change in Quantity Supplied |
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| A change in quatity supplied refers to a movement along a supply curve. The only factor than can directly cause a change in the quantity supplied of a good is a change in price of the good. |
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The price quantity combination from which there is no tendency for buyers or sellers to move away.
Graphically, equilibrium is the intersection point of the supply and demand curves. |
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| A condition in which quantity supplied is greater than quantity demanded. Only occurs at prices above equilibrium price. |
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A condition in which quantity demanded is greater than quantity supplied.
Shortages occur only at prices below the equilibrium. |
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Maximum buying price - Price paid.
The difference b/n the maximum price a buyer is willing and able to pay for a good or service and the price actually paid. |
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Price received - Minimum selling price.
The difference between te price sellers receive for a good and the minimum or lowest price for which they would have sold the good. |
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| The sum of consumers' surplus and producers' surplus. |
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| A gon't mandated maxiumum price above which legal trades cannot be made. |
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| A gov't mandated minimum price below which legal trades cannot be made. |
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