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58 Cards in this Set
- Front
- Back
ceteris paribus
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all other variables remain fixed
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economics
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the study of choice in scarcity
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marginal change
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a small, one-unit, change
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macroeconomics
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the study of the nation's economy as a whole
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microeconomics
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the study of choices made by households - gov't and their choices affect on markets
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normative economics
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analysis answering "What Ought to be?"
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positive economics
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analysis answering "What Is or what Will be?"
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scarcity
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resources are limited
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variable
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something that can take on different values
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long run
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long enough for a firm to change all of the factors of production, like build a new facility
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marginal benefit
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the extra benefit resulting from an increase in some activity
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marginal cost
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the additional cost resulting from an increase in some activity
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marginal product of labor
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the change in output from one additional worker
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norminal value
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the face value of money
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real value
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the value of money in terms of what it can buy
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opportunity cost
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what you sacrifice to get something
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short run
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a period of time when one or more factors is fixed, a firm cannot modify facility
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external cost
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a third party's cost
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external benefit
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a third party's benefit
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externality
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the effect of a transaction on a third party
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comparitive advantage
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the ability of one person or nation to produce a good at a lower opportunity cost
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absolute advantage
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the ability of one person or nation to produce a good at a lower absolute cost
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centrally planned economy
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gov't controls productions, goods, and distribution
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perfectly competitive market
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a market with a very large number of firms, so single firm affects market price
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demand schedule
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a table that shows the relationship between price and customer demand, ceteris paribus
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individual demand curve
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a curve that shows the relationship between price and single customer demand, ceteris paribus
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quantity demanded
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the amount of a good an individual or group of consumers is willing to buy
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law of demand
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the higher the price, the smaller the quantity demanded, ceteris paribus
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change in quantity demanded
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change in demand resulting from change in PRICE
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substitution effect
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the change in consumption resulting from a change in the PRICE of one good relative to the PRICE of another good
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income effect
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the change in consumption resulting from a change in REAL INCOME
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market demand curve
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a curve showing the relationship between price and quantity demanded by ALL consumers together, ceteris paribus
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supply schedule
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a table of numbers that shows the relationship between price and quantity supplied, certeris paribus
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quantity supplied
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the amount of a good an individual girm or firms as a group are willing to sell
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change in quantity supplied
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a change in the quantity supplied resulting from a change in the PRICE of a good
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market supply curve
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a curve showing the relationship between PRICE and QUANTITY supplied by all producers together
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market equilibruim
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quantity demanded = quantity supplied, no pressure to change price
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excess demand
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consumers demand more than suppliers are willing to give
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excess supply
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producers willing to sell more than consumers are willing to buy
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change in demand
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change in demand caused by something OTHER THAN PRICE, represented by a graphical SHIFT
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normal good
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when income increases = demand increases
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substitutes
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two goods related in suh a way that an increase in PRICE for one increases DEMAND for the other
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complements
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increase in price of one good decreases demand for another
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inferior
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increase in income decreases demand
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change in supply
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change in supply resulting from something OTHER THAN PRICE, graphically represented by shift of supply curve
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price elasticity of demand
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a measure of the responsiveness of QUANTITY demanded to changes in PRICE.
% Change in Quantity Demanded ----------------------------- % Change in Price |
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price elasticity of supply
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a measure of the responsiveness of the QUANTITY supplied to changes in PRICE.
% Change in Quantity Supplied ----------------------------- % Change in Price |
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elastic demand
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price elasticity > 1
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inelastic demand
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price elasticity < 1
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unitary elastic
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price elasticity = 1
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perfectly inelastic demand
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price elasticity = 0
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perfectly elastic demand
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price elasticity = infinate
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income elasticity of demand
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responsiveness of QUANTITY demanded to INCOME change
% Change Quantity Demanded --------------------------- % Change in Income |
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cross elasticity of demand
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responsiveness of quantity DEMANDED to changes in the PRICE of a RELATED GOOD.
% Change Quantity Demanded -------------------------- % Change Price Related Good |
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perfectly inelastic supply
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price elasticity of supply = 0
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perfectly elastic supply
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price elasticity of supply = infinate
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price-change formula
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shows percentage change in EQUILIBRUIM PRICE resulting from a change in DEMAND or SUPPLY,given values for the price elasticity of supply and the price elasticity of demand.
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midpoint method
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Change in variable
------------------- Average value of variable |