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Definition
| the study of how society manages its scarce resources |
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| the property of society getting the most it can from its scarce resources |
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| the property of distributing economic prosperity uniformly among the members of society |
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| whatever must be given up to obtain some item |
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| people who systematically and purposefully do the best they can to achieve their objectives |
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| small incremental adjustments to a plan of action |
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| something that induces a person to act |
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| an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services |
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| the ability of an individual to own and exercise control over scarce resources |
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| a situation in which a market left on its own fails to allocate resources efficiently |
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| the impact of one person's actions on the well being of a bystander |
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| the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices |
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| the quantity of goods and services produced from each unit of labor input |
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| an increase in the overall level of prices in the economy |
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| fluctuations in economic activity, such as employment and production |
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| a visual model of the economy that shows how dollars flow through markets among households and firms |
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| Production Possibilities Frontier |
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| a graph that allows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology |
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Definition
| claims that attempt to describe the world as it is |
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| claims that attmept to prescribe how the world should be |
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| the ability to produce a good using fewer inputs than another producer |
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| whatever must be given up to obtain some item |
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| the ability to produce a good at a lower opportunity cost than another producer |
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| a group of buyers and sellers of a particular good or service |
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| a market in which there are many buyers and many sellers so that each has a negligible impact on the market price |
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| the amount of a good that buyers are willing and able to purchase |
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Definition
| the claim that, other things equal, the quanitity demanded of a good falls when the price of the good rises |
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| a table that shows the relationship between the price of a good and the quantity demanded |
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| a graph of the relationship between the price of a good and the quantity demanded |
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Definition
| a good for which, other things equal, an incrase in income leads to an increase in demand |
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| a good for which, other things equal, an increase in income leads to a decrease in demand |
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Definition
| two goods for which an increase in the price of one leads to an increase in the demand for the other |
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Definition
| two goods for which an increase in the price of one leads to a decrease in the demand for the other |
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Definition
| the amount of a good that sellers are willing and able to sell |
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Definition
| that claim that, other things equal, the quantity supplied of a good rises when the price of a good rises |
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Definition
| a table that shows the relationship between the price of a good and the quantity supplied |
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Definition
| a graph of the relationship between the price of a good and the quantity supplied |
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Definition
| the situation in which the market price has reached the level at which quantity supplied equals quantity demanded |
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| the price that balances quanitity supplied and quantity demanded |
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Definition
| the quantity supplied and the quantity demanded at the equibrium price |
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Definition
| a situation in which quantity supplied is greater than quantity demanded |
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Definition
| a situation in which quantity demanded is greater than quantity supplied |
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Definition
| the claim that the price of any good adjusts to pring the quantity supplied and the quantity demanded for that good into balance |
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Definition
| a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants |
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| Price Elasticity of Demand |
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Definition
| 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 |
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Definition
| the amount paid by buyers and received by sellers of a good, computed as the price of the good times the quantity sold |
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| Income Elasticity of Demand |
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Definition
percentage change in quantity demanded
percentage change in income |
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| Cross-Price Elasticity of Demand |
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Definition
percentage change in quantity demanded good 1
percentage change in the price of good 2 |
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| Price Elasticity of Supply |
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Definition
percentage change in quantity supplied
percentage change in price |
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Definition
| a legal max on the price at which a good can be sold |
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Definition
| a legal min on the price at which a good can be sold |
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Definition
| the manner in which the burden of a tax is shared among participants in a market |
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Definition
| the study of how the allocation of resources affects economic well-being |
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Definition
| the max amount that a buyer will pay for a good |
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Definition
| the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it |
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Definition
| the value of everything a seller must give up to produce a good |
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Definition
| the amount a seller is paid for a good minus the seller's cost of providing it |
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Definition
| the property of a resource allocation of maximizing the total surplus received by all members of society |
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Definition
| the property of distributing economic prosperity uniformly among the members of society |
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Definition
| the fall in total surplus that results from a market distortion, such as a tax |
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Definition
| the price of a good that prevails in the world market for that good |
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Definition
| a tax on goods produced abroad and sold domestically |
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Definition
| the amount a firm receives for the sale of its output |
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Definition
| the market value of the inputs a firm uses in production |
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Definition
| total revenue - total cost |
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Definition
| input costs that require an outlay of money by the firm |
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Definition
| input costs that do not require an outlay of money by the firm |
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Definition
| total revenue - total cost, including both explicit and implicit costs |
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Definition
| total revenue - total explicit cost |
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Definition
| the relationship between quantity of inputs used to make a good and the quantity of output of that good |
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Definition
| the increase in output that arises from an additional unit of input |
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Term
| Diminishing Marginal Product |
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Definition
| the property whereby the marginal product of an input declines as the quantity of the input increases |
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Definition
| costs that do not vary with the quantity of output produced |
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Definition
| costs that vary with the quantity of output produced |
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Definition
total cost
quantity of output |
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Term
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Definition
fixed cost
quantity of output |
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Definition
variable cost
quantity of output |
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Definition
| increase in total cost that arises from an extra unit of production |
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Definition
| the quantity of ourput that minimizes average total cost |
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Definition
| the property whereby long-run average total cost falls as the quantity of output increases |
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Definition
| the property whereby long-run average total cost rises as the quantity of output increases |
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Term
| Constant Returns to Scale |
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Definition
| the property whereby long-run average total cost stays the same as the quantity of output changes |
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Term
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Definition
| a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker |
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Definition
total revenue
quantity sold |
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Term
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Definition
| the change in total revenue from an additional unit sold |
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Definition
| a cost that has already been committed and cannot be recovered |
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Definition
| a firm that is the sole seller of a product with-out close substitutes |
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Definition
| a monopoly that arises because a single firm cal supply a good or service to an entire market at a smaller cost than coule two or more firms |
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Definition
| the business practice of selling the same good at different prices to different customers |
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Definition
| a market structure in which only a few sellers offer similar or identical products |
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Definition
| a market structure in which many firms sell products that are similar but not identical |
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Term
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Definition
| a market structure in which only a few sellers offer similar or identical products |
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Definition
| the study of how people behave in strategic situations |
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Definition
| an agreement amoung firms in a market about quantities to produce or price to change |
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Definition
| a group of firms acting in unison |
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Definition
| a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen |
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Definition
| a particular "game" between two captured prisioners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial |
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Definition
| a strategy that is best for a player in a game regardless of the strategies chosen by the other players |
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