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| Includes all of the items that go into the production of a product. This includes Land, Labor, and Capitol (the tools involved in making the good). |
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| Growth, full employment, Efficiency, Price Stability |
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| Types of Economic Systems |
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Definition
Free- Prices set by supply and demand
Traditional- Based on subsistance farming and providing the bare essentials
Planned-Setup where government determines prices, production levels
Mixed-Some production is done by private sector, others by government |
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| A metaphor for the principle that when a person acts in their own self interest, they tend to promote the good of the community. |
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| The limited nature of society's resources |
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| The study of how society manages its scarce resources |
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| Whatever must be given up to obtain some item |
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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 impact of one person's actions on the well-being of a bystander |
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| an increase in the overall level of prices in the economy |
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| The study of how households and firms make decisions and how they interact in markets |
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| The study of economywide phenomena, including inflation, unemployment, and economic growth |
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| Claims that try to describe the world as it is |
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| Claims that attempt to prescribe how the world should be |
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| Goods and services that are produced abroad and sold domestically |
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Definition
| goods and services that are produced domestically and sold abroad |
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| The ability to produce a good at a lower opportunity cost than another producer |
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| The ability to produce a good using fewer inputs than another producer |
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| a group of buyers and sellers of a particular good or servece |
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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 claim that, other things equal, the quantity demanded of a good falls when the price of the good rises |
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Definition
| the claim thatt, other things equal, the quantity supplied of a good rises when the price of the good rises |
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| a situation in which the market price has reached the level at which quantity supplied equals quantity demanded |
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| a situation in which quantity supplied is greater then quantity demanded |
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| a situation in which quantity demanded is greater than quantity supplied |
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| a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants |
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| condition where a change in price has little to no effect in the demand for a product |
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Definition
(in a firm)- the amount a firm receives for the sale of its output
(in a market)- 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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Definition
| a legal maximim on the price at which a good can be sold |
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| a legal minimum on the price at which a good can be sold |
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| the study of how the allocation of resources affects economic well-being |
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| the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it |
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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 fairly among the members of a society |
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| the fall in total surplus that results from a market distortion, such as a tax |
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| the price of a good that prevails in the world market for that good |
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| a tax on goods produced abroad and sold domestically |
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| externality where the benefits of a decision affect the bystander in a good way |
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| externality in which the effects of a decision negatively impact the bystander |
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| the costs that parties incur in the process of agreeing to and following through on a bargian |
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| the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own |
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| goods that are neither excludable nor rival in consumption |
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| a person who receives the benefit of a good but avoids paying for it |
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| a parable that ilustrates why common resources get used more than is desirable from the standpoint of society as a whole |
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| a shortfall of tax revenue from government spending |
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| A tax levied on the difference between the item's price before taxes and its cost of production |
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| the extra taxes pain on an additional dollar of income |
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| the idea that people should pay taxes based on the benefits they receive from government services |
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| the idea that taxpayers with a greater ability to pay taxes should pay larger amounts |
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| the idea that taxpayers with similar abilities to pay taxes should pay the same amount |
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| a tax for which high-income tax payers pay a smaller fraction of their income than do low-income taxpayers |
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Definition
| a tax for which high-income taxpayers and low-income taxpayers pay the same fraction of income |
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| a tax that is the same amount for every person |
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Definition
| total revenue minus total cost, including both explicit and implicit costs |
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| total revenue minus total explicit cost |
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| total revenue minus total cost |
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Definition
| costs that do not vary with the quantity of output |
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| costs that do vary with the quantity of output produced |
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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
| a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker |
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| a cost that has already been committed and cannot be recovered |
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| a firm that is the sole seller of a product without close substitutes |
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| a monopoly that arises because a single firm can supply a good or servece to an entire market at a smaller cost than could two or more firms |
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| the business practice of selling he same good at differenc prices to different customers |
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| a market structure in which only a few sellers offer similar or identical products |
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| a market structure in which many firms sell products that are similar but not identical |
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Definition
| an oligopolic situation in which only two companies produce a product |
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| a group of firms acting in unison |
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| the study of how people behave in strategic situations |
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| a particular "game" between two captured prisoners that illuystrates why cooperation is difficult to maintain even when it is mutually beneficial |
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Definition
| Organization of Petrol. Exporting Countries |
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