76 Cards in this Set
| Front | Back |
|---|---|
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Scarcity
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There is not enough to meet demand. Demand greater than supply
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Opportunity Cost
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Something you give up for something else.
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Microeconomics
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About firms and individuals
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Production Possibilities Frontier
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Graph showing the combinations of things you can produce.
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Comparative Advantage
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making something more efficient (lower opportunity cost)
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Absolute Advantage
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Making more of something than someone else.
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Law of Demand
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When price goes up demand goes down, and when price goes down demand goes up
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Law of Supply
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Price goes up when demand goes up
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Market Equilibrium
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where supply and demand meet
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Price Ceiling
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The maximum someone can sell something at. (ceiling is below equilibrium)
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Price Floor
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The minimum someone can sell something at. (floor is above equilibrium)
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Excise Tax
|
Tax on a specific good or service (alcohol tax)
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Tax Incidence
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how tax is distributed between buyers and sellers
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Subsidy
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opposite of a tax, government gives money when stuff is bought or sold
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Elasticity
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measures how much demand changes compared to how much price changes. (Quantity/Price)
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Cross Price Elasticity
|
how much demand changes when the price of something else changes
|
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Inelastic Demand
|
Values less than 1
|
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Elastic Demand
|
Values greater than 1
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Unit Elastic Demand
|
Values equal to 1
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Substitute Good
|
good in place of another good
|
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Normal Good
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Demand goes up when income goes up.
|
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Inferior good
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Demand goes up when income goes down.
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Compliment Good
|
two things that go good together.
|
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Budget Constraint
|
combination of things you can buy with your budget.
|
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Relative Price
|
price of a good relative to another price
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Rational Preferences
|
Logically consistent choices
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Utility
|
satisfaction obtained using a good or service.
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Income Effect
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If income changes, buying habits will also change
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Firm
|
business that makes things
|
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Long-run
|
however long it would take to change cost.
|
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Short-run
|
not enough time to change cost
|
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Variable Cost
|
cost that change during production
|
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fixed Costs
|
costs that stay the same.
|
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Total Cost
|
Fixed cost+Variable Cost
|
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Marginal Production of Labor
|
how much more stuff you make by employing one more worker.
|
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Explicit Cost
|
direct payment to others
|
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Implicit Cost
|
no money is being exchanged (just giving stuff up)
|
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Average Variable Cost
|
Variable Cost ÷ Quantity
|
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Average Total Cost
|
Total Cost ÷ Quantity
|
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Marginal Cost
|
Change in total cost ÷ change in total quantity
|
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Profit
|
revenue - cost
|
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Economic Profit
|
revenue - implicit and explicit cost
|
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Total Revenue
|
All of your revenue
|
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Marginal Revenue
|
Change in revenue ÷ change in quantity
|
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Externality
|
some cost or benefit that effects someone other than the producer or consumer.
|
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Tariff
|
Tax on imports
|
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Protectionism
|
protecting the goods here
|
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Marginal Utility
|
Change in use of a good or service since the last thing you used.
|
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Positive Statement
|
something that can be tested
|
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Normative Statement
|
What should be. (an opinion)
|
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Direct Cost
|
something you pay
|
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PPF Curve
|
point on the line is attainable, a point inside the line is attainable but not efficient, and a point outside the line is unattainable.
|
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Shift Supply Curve
|
substitute good (decrease), produce more efficiently (increase), more firms making that thing (increase). The willingness of a firm to make something at a certain price!
|
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Shift Demand Curve
|
more people in the market, price of a good goes up, if people think prices will go down in the future they will buy less now. **The willingness of a consumer to buy something at a certain price**
|
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Surplus
|
More supply than demand
|
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Shortage
|
more demand than supply
|
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Effects Of Price Ceiling/Floor On Output Level
|
consumption will go down
|
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Excise Tax On Supply And Demand
|
tax on a specific thing. Shifts the demand curve left, and the supply curve will shift left. People are willing to buy less and producers are not producing as much.
|
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Elasticity equation
|
% change quantity ÷ % change price
|
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Price Elasticity
|
how much quantity demand changes when compared to a price change of a good.
|
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Income Elasticity
|
how much people demand changes when their income changes.
|
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Diminishing Marginal Utility
|
At some point in consumption satisfaction will decrease.
|
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Marginal Production
|
How much more stuff you produce by having one more labor
|
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Diminishing Marginal Production
|
Eventually you make less stuff per laborer
|
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Average Cost
|
normal cost ÷ quantity
|
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Sunk Cost
|
cost that you have paid in and can not get back.
|
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Total Revenue equation
|
Price x quantity
|
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Why MR=MC
|
profit maximizing
|
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Monopoly
|
market with just one seller
|
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Competitive Market
|
many buyers and sellers, standardized product, comparatively easy to enter the market.
|
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Monopolistic Competition
|
A market structure in which barriers to entry are low and many firms compete by selling similar, but not identical, products.
|
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Game Theory
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An approach to modeling the strategic interaction of oligopolists in terms of moves and counter-moves.
|
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Oligopoly
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A marker dominated by a small number of strategically interacting firms.
|
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Discounting
|
the act of converting a future value into its present day equivalent
|
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Discount rate
|
The interest rate used in computing present values.
|
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Dividends
|
part of a firm's current profit that is distributed to shareholders
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ECON 101: FINAL