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27
Economics
Not Applicable
07/01/2011

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Term
price ceiling
Definition
describes the process when a govt. tells seller the MAX. they are allowed to charge consumers. price ceilings are almost always LOWER than what the equilibrium price should be.
Term
price floor
Definition
describes the process when govts. tells sellers the MIN. they are allowed to pay for input. price floors are almost always HIGHER than what the equilibrium price should be.
Term
willingness to pay
Definition
is the MAX. price @ which a potential buyer would buy a good or service.
Term
individual consumer surplus
Definition
is the net gain a buyer achieves from producing a good or service.
Term
total consumer surplus
Definition
is the sum of the individual consumer of all buyers of a good or service.
Term
consumer surplus
Definition
is a term used by economists to refer to both individual consumer surplus & total consumer surplus.
Term
sellers cost
Definition
is the LOWEST price @ which a seller is willing to sell a good.
Term
economics
Definition
is the study of economics @ the level both of individuals & of society as a whole- the choices that are made.
Term
a market economy
Definition
is an economy in which decisions about production and consumption are made by individual producers and consumers.
Term
invisible hand
Definition
refers to the way in which the indvidual pursuit of self-interst can lead to good results for the society as a whole.
Term
microeconomics
Definition
is the branch of economic studies that studies how people make decisions & how these decisions interact
Term
market failure
Definition
is the opposite of invisible hand; it refers to when individual pursuit of self-interest can lead to bad results for society as a whole.
Term
recessions
Definition
are a downturns in the economy technically defined as 2 consec. quarters w/ decreasing G(ross)
D(omestic)P(roduct).
Term
macroeconomics
Definition
is the branch of economics that is concerned w/overall ups & downs in the economy.
Term
economic growth
Definition
the growing ability of the economy to produce goods & services.
Term
4 principles that underlie the economics of individual choice
Definition
1)resources are scarce 2)opportunity cost 3)how much? 4)people usually exploit opportunities to make themselves better off. as a result people respond to incentives.
Term
an incentive
Definition
is anything that offers rewards to people who change their behavior.
Term
opportunity cost
Definition
the real cost of something is how much you must be willing to give up.
Term
how much?
Definition
a decission made @ the margin.
Term
marginal analysis
Definition
is the study of marginal decisions.
Term
interaction of choice
Definition
this means my choices affect your choices & vice versa.
Term
5 principles of interaction
Definition
1)there are gains to be made from trade 2)market moves toward equilibrium 3)resources should be used as effeciently as possible to achieve cociety's goals 4)markets usually lead to efficiency 5)when markets don't achieve efficency, govt intervention can improve society's welfare.
Term
trade
Definition
is the process in which people select diff. occupations and each person provide goods or services that other people want in exchange for diff goods and services in return.
Term
specializations
Definition
the process of each person selecting a diff. occupation.
Term
equilibrium
Definition
when no individul would be better off doing something different
Term
equity
Definition
means that everyone gets a fair share.
Term
a model
Definition
is any simplifieed representation of reality that is used to better understand real-life situations.
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