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Basic
Basic
41
Economics
Undergraduate 1
04/04/2010

Additional Economics Flashcards

 


 

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Term
Opportunity cost
Definition

Opp cost from 1 unit increase

The marginal cost is what you  must give up to get one additonal unit of it.

Term
marginal benefit
Definition
benefit that arises from a one unit increase in an activity
Term
economics use NORMATIVE/POSITIVE statements. and what is the defintion of the correct answer?
Definition

they use positive statements, which is what is.

 

they do not use normative statements which is what out to be.

Term
5 core ideas of economic thinking
Definition

1. people make rational choices by comparing costs and benefits

2. cost is what you must give up

3. benefit is what you gain when you get something and is measued by what you are willing to give up to get it

4. a rational choice is on the margin

5. choices respond to incentives(carrots)

Term
consumption good/service
Definition
goods and services that are bought by individuals and used to provide personal enjoyment and and contribution to the a person's quality of life.
Term
captial goods
Definition

goods that are bought by businesses to increase their productive resources.

 

to help a bness make more chedda

Term
profit (or loss)
Definition
income earned by an entrepreneur for running a business
Term
production possibilities frontier
Definition
the boundry between the combinations of goods and services that can be produced. also combinations that cannot be produced, given the available factors of production&technology.
Term
production possiblities frontier
Definition
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Term
Production efficiency
Definition

a situation in which we cannot produce more of one good or service w/o producing less of something else.

 

-production is efficient when the economy is getting all it can from its resources.

-economy can produce at any point inside the ppf

-outside is unattinable.

Term
comparative advantage
Definition
the ability of a person to perform an activity (good or service) at a lower opportunity cost than someone else.
Term
absolute advantage
Definition
when one person is more productive than another person in several or all activities.
Term
how do people gain from specialization of trade?
Definition

1. person has a comparative advanage - he or she can perform that activity at a lower opportunity cost than someone else.

 

2. people gain by increasing the production of the item in which they have a comparative advantage and trading.

Term
what makes production possibilities expand?
Definition

-technological change

-increase in capital and human capital expand production possibilites

 

Term
Law of demand
Definition
other things remaining the same, if the price of a good rises, the quanity demanded of that good decreases; and if the price of a good falls, the quanity of that good increases
Term
demand
Definition
the relationship between the quanittiy demanded and the price of a good when all other influences on buying plans remain the same.
Term
quanitiy demanded
Definition
the amount of any food, serivce, or resource that people are willing and able to buy during a specified period at a specified price.
Term

demand schedule

 

demand curve

Definition

demand schedule: a list of the qty demanded at each different price (all other things remaining the same)

 

demand curve: graph of the relationship between qty demanded of a good and its price (all other things remaning the same)

Term
market demand
Definition
the sum of the demands of all the buyers in the market
Term
change in demand
Definition
a change in the qty that people plan to buy when any influence on buying plans, other than price, of the good changes.
Term
what are some influences on change in demand?
Definition
  • price of related goods (complements & subs)
  • income
  • expectations
  • number of buyers
  • preferences
Term
How does the change of the price in a substitute influence?
Definition

-demand for a good increases if price of its substitutes rises. Demand decreases if price of sub falls.

-move in same direction.

Term
How does the price of a complement influence?
Definition

-demand for a good decreases if the price of its complements rises. demand for a good increases if its price rises.

-move in opposite directions

Term
Normal Good
Definition

-A good for which demand increases when income increases

 

 

Term
inferior good
Definition
  • a good for which demand decreases when income increases
Term
change in qty demanded
Definition
 a change in the qty demanded of a good that people plan to buy that results from a change in the price of the good w/ all other influences remaning the same.
Term
quantity supplied
Definition

the amount of any good/service/resource that people are willing able to to sell

 

-specific peiord of time at a specific price

 

Term
supply schedule
Definition

a list of the qty supplied

at each different price

all other influences remaining the same

Term
supply curve
Definition
a graph of the relationship between the qty supplied of a good and its price, all other influences remaining the same
Term
marker supply
Definition
the sum of the supplies of all the sellers in the market
Term
Average total cost
Definition

Total cost per unit of output, which equals average fixed cost plus avarage variable cost.

 

FIXED+VARIABLE

Term
Average Fixed Cost
Definition
Total fixed cost per unit of output.
Term
Total Variable Cost
Definition
Total variable cost per unit of output
Term
To produce more output in the short run, a firm must employ more of...
Definition

workers (its variable factors of production)

 

cannot change: technology & qty of capital

 

"the time frame in which qty of some resources are fixed. in the short run, a firm can usually change the qty of labor it uses but not its technolog and quantity of capital. "

Term
Total cost
Definition
The cost of all the factors of production used by a firm.
Term
Total Revenue Test
Definition

A method of estimating the price elasticty of demand by observing the change in total revenue that reuts from a price change (all other influences remaining same).


Term
Avg. Variable Cost
Definition
TOtal cost for labor per each additional unit outputed.
Term
Total Variable Cost
Definition

The cost of the firm's:

 

variable factor of production: labor

 

 

Hence; the cost of labor.

Term
Average Total Cost
Definition

The total cost per unit of output.

 

Equals: avg. fixed cost+avg. variable cost

Term
Shutdown Point
Definition

When PRICE equals MIN. AVG VARIABLE COST.

 

The qty produced is that at what is being produces when avg. variable cost is at its minimum.

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