Term
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Definition
| The economic health and stability of the individual people or businesses and how price, production and distribution are determined. |
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Term
| What are the goals of microeconomics? |
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Definition
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Term
| What is opportunity cost? |
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Definition
| Value of next best alternative given up when a choice is made |
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Term
| How will you use the concept of opportunity cost this weekend/every day? |
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Definition
| If I choose to by organic I lose the opportunity to save money on a cheaper brand, however I gain the benefit to support farmers that grow organically |
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Term
| How do you find total revenue? |
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Definition
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Term
| How do you find total cost? |
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Definition
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Term
| What are the four questions any society must answer? |
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Definition
Scarcity?:
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What to produce (How much)?
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How will resources be used (What technology)?
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Who gets to consume?
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When will resources be used (Perishability)?
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Term
| Graphically illustrate and explain the difference between a vertical line and a horizontal line. Be sure to indicate slopes in the explanation. |
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Definition
[image]
Horizontal: Slope = 0, meaning there is no growth or change in X (ΔX)
Vertical = slope of infinity, meaning there is a infinite change of X
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Term
| List the demand determinants. |
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Definition
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Number of Buyers
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Expectations
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Income
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Tastes/Preferences
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Price of Related goods
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Term
| List the supply determinants. |
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Definition
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Price of Relatable goods
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Expectations
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Number of sellers
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Cost of resources
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Technology
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Term
| Explain and give the reasons for the law of demand. |
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Definition
LoD is inverse relationship that causes a move along a given demand line, P^Q٧ while P٧Q^
Reasons: Substitutions and Income |
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Term
| Explain and give the reasons for the law of supply. |
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Definition
LoS is an positive relationship that causes a move along a given supply life, P^Q^ while P٧Q٧
Reasons: Profit incentive and Cost
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Term
| What is CHANGE in DEMAND? |
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Definition
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A change in demand due to a constant price, shift right |
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Term
| What is QUANITY DEMANDED? |
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Definition
[image]
A change in quantity demanded due to a change in price, shift along demand line |
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Term
Illustrate and explain market equilibrium.
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Definition
[image]
Quantity demanded = Quantity supplied at one price |
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Term
| When workers are paid higher wages, production costs: |
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Definition
Rise, supply shifts leftward, and product prices rise
Higher input prices cause supply to decrease, which causes equilibrium price to increase |
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Term
| If market supply increases, equilibrium price will |
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Definition
fall, causing a movement along the demand curve.
When supply shifts rightward, equilibrium price falls. As price falls, the quantity demanded rises. This is shown as a movement along the demand curve.
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Term
When the going rate is $2.00 per hour, Ann wants to babysit 6 hours each week and Pat wants to babysit 4 hours each week. If the rate goes up to $4.00, Ann and Pat both double the number of hours they are willing to babysit each week. Based on this information, a combined supply curve will pass through the points:
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Definition
price = $2.00, quantity supplied = 10 and price = $4.00, quantity supplied = 20.
Ann and Pat together will supply 10 hours at the $2.00 rate and 20 hours at the $4.00 rate. |
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Term
| When applied to labor markets, the law of supply suggests that: |
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Definition
an increase in the wages earned by nurses will cause the quantity of nurses supplied to increase.
The law of supply states that as the price of a good rises, the quantity of it supplied will rise. The law of supply does not address the relationship between price and quantity demanded.
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Term
| If the price of a good is below equllibrium? |
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Definition
then a shortage will be observed.
Whenever the price is below equilibrium, a shortage is observed.
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Term
USA Today noted that the destruction caused by three 2004 hurricanes, combined with the already high real-estate prices, were making people reconsider retiring to Florida. The cost of homeownership was increasing partly because past hurricanes had roughly doubled insurance premiums statewide. Construction costs could rise due to stricter building codes. Some people, however, did not expect the influx of retirees to change because the baby boom generation was approaching retirement age and Florida had long attracted many retirees. Which factor would not move either the supply or the demand curve?
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Definition
The already high real-estate prices.
Price does not move either the supply or demand curve. A change in price will move people along a curve. |
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Term
Given the following supply table, an increase in the price of pants from $30 to $50 per pair will increase the:
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Definition
quantity of pants supplied by 200 pairs.
A supply table tells you the quantity of goods supplied at various prices. To read the table, find the price on the left and read the corresponding quantity supplied on the right. At $30 quantity supplied is 500 pairs per week. At $50 a pair, quantity supplied is 700 pairs per week. Quantity supplied increases by 200 pairs |
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Term
| According to the law of supply |
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Definition
supply curves slope upward
The law of supply states that, other things constant as the price of a good goes up, the quantity supplied goes up and as the price of a good goes down, the quantity supplied goes down. This is shown graphically by a curve that slopes upward |
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Term
When the drug Vioxx was pulled from the market by Merck in September 2004 due to its association with heart problems, the demand for other pain medications:
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Definition
increased, putting upward pressure on their price.
Since Vioxx was pulled from the market, arthritis sufferers had to turn to other medications, causing the demand for those other medications to increase. There have been problems reported with Celebrex and Bextra since then, but the immediate effect was to increase the demand for these substitutes, putting upward pressure on equilibrium price. |
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Term
| In a market where there are strong social and political forces |
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Definition
quantity demanded might not equal quantity supplied
Where the invisible hand is the only force, equilibrium is likely to be where quantity demanded equals quantity supplied. But, in the real world, political and social forces are likely to exist so that equilibrium can be where quantity demanded doesn't equal quantity supplied. |
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Term
. The price of a ticket to the Grateful Dead concert is set at $35. All the tickets for the concert sell out one hour after they go on sale and there are still 1000 fans who want to buy tickets. It follows that:
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Definition
the equilibrium price of tickets to the concert is more than $35
At $35 per ticket, quantity demanded exceeds quantity supplied, so $35 cannot be equilibrium price. To eliminate the shortage, price would have to rise. |
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Term
In response to hurricanes Charlie, Frances, and Ivan in the fall of 2004, sales of plywood, used to protect windows from high winds, soared in Florida. Using the supply and demand model, what would be the best way to show the effects of the hurricane preparation on the plywood market?
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Definition
B. Demand curve shifted to the right, supply curve did not shift.
The buyers are directly affected, and sellers respond in hopes of making a profit. Hence we move the demand curve and along the supply curve. |
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Term
If there is an improvement in technology one would expect
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Definition
a shift downward (or to the right) of the supply curve.
Technology is a shift factor of supply.
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Term
| If the price of movies on video rises while the price of movies on DVD remains the same, the law of demand predicts that consumers will: |
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Definition
substitute movies on DVD for movies on video.
The law of demand is based on the principle that consumers will substitute away from products that have become relatively more expensive; this does not mean that they will necessarily stop buying more expensive products. |
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Term
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Definition
A. is reflected as a rightward (outward) shift of the demand curve.
An increase in demand is expressed as an outward (or rightward) shift of the demand curve. It is caused by something other than the price. It means people will buy more at any price. |
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Term
Suppose when you are offered $5.00 per hour to work in the campus library, you choose not to work, but when you are offered $8.00 per hour, you accept a part-time position. Your behavior can best be explained by the fact that your supply of labor curve is:
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Definition
upward-sloping.
When the wage rate rose, the quantity of labor hours supplied rose, so the labor supply curve slopes upward. |
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Term
| Compared to last year, fewer oranges are being purchased and the selling price has decreased. This could have been caused by |
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Definition
a decrease in demand.
Only a decrease in demand will result in a decrease in quantity and a decrease in price.
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Term
| Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause |
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Definition
farmers to substitute production of wheat for production of corn.
The increase in the price of wheat causes a movement along the supply curve for wheat (change in quantity supplied), not a shift.
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Term
The law of supply states that, other things equal, as the price of a good goes:
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Definition
up, the quantity supplied goes up.
The law of supply states that, other things constant as the price of a good goes up, the quantity supplied goes up and as the price of a good goes down, the quantity supplied goes down.
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Term
Given that diesel cars get much better gas mileage than the typical car, an increase in the price of gasoline would be expected to:
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Definition
increase the demand for diesel cars.
The change in the price of gasoline causes a movement along the demand for gasoline curve, not a shift. The higher gasoline price in 2004 led to an increase in the demand for diesel cars as consumers sought to take advantage of better gas mileage.
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Term
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Definition
| The ways individuals and societies allocate scarce resources to unlimited wants. |
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Term
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Definition
| Deals with entire society: employment, GDP and inflation. |
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Term
| What is the economic theory? |
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Definition
| Accurately explain how the world works |
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Term
| What are the goals of macroeconomics? |
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Definition
Full employment
Price stability
Economic growth
Economic security |
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Term
| Why is scarcity a problem in society? |
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Definition
People's WANTS = UNLIMITED
World's RESOURCES = LIMITED |
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Term
| What are the productive resources? |
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Definition
Land (natural or RENT)
Labor (physical/mental talents)
Capital (improvements to natural resources)
Entrepreneurship (Combined L,L,C) |
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Term
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Definition
| Reward for beating risks and organizing production. |
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Term
| What is the PRODUCTION POSSIBILITIES FRONTIER? |
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Definition
| The maximum combinations of two goods an economy can produce |
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Term
| What kind of line will PPF be? |
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Definition
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Term
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Definition
Scarcity
Choice
Opportunity Cost |
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Term
| What does the market system use to allocate resources? |
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Definition
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Term
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Definition
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Term
| What are the non-market methods? |
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Definition
Brute force
Queuing
Lottery
Tradition
Geovernment |
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Term
| What are private property rights? |
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Definition
| Do anything with property EXCEPT when it bothers other's property |
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Term
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Definition
| Adhere to rules and governing statues with an area |
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Term
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Definition
| when someone's production and consumption affect a 3rd party and 3rd party has no control |
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Term
| Why is limited government preferred? |
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Definition
Governs the least is the best.
Protects those who cannot protect
Promotes competition and provides laws and standards |
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Term
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Definition
| Place where buyers and sellers strike bargins and transact business |
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Term
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Definition
| QUANTITIES consumers are WILLING AND ABLE to purchase during some time period at VARIOUS prices |
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Term
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Definition
| Other things held constant |
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