200 Cards in this Set
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In Microsoft Dynamics AX 2012, which of the following statements about financial dimensions are true? (Choose all that apply.) A. Only the default financial dimensions are allowed. B. Financial dimensions can be created by using a form. C. Financial dimensions can be created by using a wi…
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-Financial dimensions can be created by using a form. -A user can create an unlimited number of financial dimensions.
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You need to ensure that Microsoft Dynamics AX 2012 does not allow journal transactions for an account to result in a credit balance. What should you do? A. On the Main accounts form, in the Balance control list, select Debit. B. On the Main accounts form, in the DB/CR proposal list, selec…
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On the Main accounts form, in the Balance control list, select Debit.
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In Microsoft Dynamics AX 2012, which of the following statements about a chart of accounts is true? A. A chart of accounts can be used for no more than one legal entity. B. A chart of accounts can be used for only one division of a legal entity. C. A separate chart of accounts can be used…
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A chart of accounts can be used for multiple legal entities within an organization.
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In Microsoft Dynamics AX 2012, the accounting currency is set to USD (United States dollars). You create a sales order that has a currency of CAD (Canadian dollars). When you generate the invoice, Microsoft Dynamics AX 2012 displays an error message that the account for penny differences …
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Accounts for automatic transactions
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In Microsoft Dynamics AX 2012, which of the following transactions can be reversed by using the Reverse Transaction functionality? (Choose all that apply.) A. Customer transactions that relate to sales orders. B. Vendor transactions that relate to purchase orders. C. Fixed Asset transacti…
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-Fixed Asset transactions that relate to fixed asset postings. -General Ledger transactions that relate to general journal entries.
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In Microsoft Dynamics AX 2012, which of the following are features of approval journals? (Choose all that apply.) A. Setting up journal templates with a mandatory approval setting. B. Adding user groups through the workflow management functionality. C. Applying journal templates after pos…
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-Setting up journal templates with a mandatory approval setting. -Adding an extra layer of approval control by using the posting restriction option.
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In Microsoft Dynamics AX 2012, which of the following account types can you choose in a general journal line? (Choose all that apply.) A. Item B. Ledger C. Project D. Sales Order E. Vendor
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-Ledger -Project -Vendor
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In Microsoft Dynamics AX 2012, which of the following types of information are required to create a journal entry line in the General Ledger? (Choose all that apply.) A. Account B. Account name C. Accounting date D. Debit or Credit amount E. Dimension F. Offset account G. Transaction text
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-Account -Accounting date -Debit and Credit amount -Offset account
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While invoice-updating a sales order, Microsoft Dynamics AX 2012 displays the following error. Account number for transaction type Tax does not exist. You need to resolve the error. What should you do? A. Create a record in the item Posting form for the sales tax group that is used in the…
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In the Ledger posting groups form, specify the main account for the corresponding ledger posting group.
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You need to enable sales tax calculation in Microsoft Dynamics AX 2012. Which of the following must you set up? A. the sales tax code for the sales tax groups B. the sales tax authorities that are attached to the vendor C. the ledger posting group that is attached to the sales tax groups …
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the sales tax code for the sales tax groups
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You need to automatically process sales tax payment settlements. In Microsoft Dynamics AX 2012, what should you do? A. Use the general ledger journal settlement function. B. Use the Settle open transactions function in the vendor table. C. Use the payment journal settlement function when …
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Use the Sales Tax Payment periodic job in the General Ledger module.
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In Microsoft Dynamics AX 2012, which type of round-off can you apply to a sales tax group? A. Sales tax codes B. Sales tax exemptions C. Sales tax intervals D. Sales tax provisions
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Sales tax codes
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In Microsoft Dynamics AX 2012, what is a reason code? A. a system-generated code used on Audit trail reports B. a system-generated code used to track transaction postings C. a user-defined field used to post transactions D. a user-defined field used to provide background data about a tran…
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a user-defined field used to provide background data about a transaction
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In Microsoft Dynamics AX 2012, what is the purpose of the fill utility? A. To import Microsoft Excel data. B. To transfer sales tax information. C. To enable users to bulk-update records. D. To enable the automatic completion of form fields.
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To enable users to bulk-update records.
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In Microsoft Dynamics AX 2012, which of the following bank account status options are available? (Choose all that apply.) A. Open B. Closed C. Active for all transactions D. Inactive for new transactions
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-Active for all transactions -Inactive for new transactions
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In Microsoft Dynamics AX 2012, which of the following credit limit tolerances can be set up in Cash and Bank Management? (Choose all that apply.) A. Confirm the system prompts the user to confirm B. Error - the system generates an error notification C. Validate the system prompts the user…
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-Error - the system generates an error notification -Warning - the system generates a warning notification
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You need to delete a check from Microsoft Dynamics AX 2012. What status must the check have before it can be deleted? A. Created B. Invoiced C. Processed D. Void
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Created
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You need to automatically select all vendor payments that are due within the same week. In Microsoft Dynamics AX 2012, what should you do? A. Configure a payment control. B. Configure a payment fee. C. Create a payment method and select Date in the Period field. D. Create a payment method…
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Create a payment method and select Week in the Period field.
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In Microsoft Dynamics AX 2012, what is the purpose of an invoice register journal? A. To use as a voucher template. B. To enter and then post invoices when they arrive. C. To display information about invoices that are pending approval. D. To pre-register invoices when they arrive and the…
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To pre-register invoices when they arrive and then transfer them to an invoice pool for approval.
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In Microsoft Dynamics AX 2012, what is the purpose of a Payment transfer form? A. To generate advance payments. B. To verify vendor transactions that are open and approved. C. To manage payments that have a status of Sent and have been posted. D. To manage payments that have a status of S…
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To manage payments that have a status of Sent and have not been posted.
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In Microsoft Dynamics AX 2012, what is the process of Accounts Payable three-way invoice matching? A. Matching the vendor invoice, sales order, and product receipts information. B. Matching the vendor invoice, purchase order, and product receipts information. C. Matching the customer invo…
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Matching the vendor invoice, purchase order, and product receipts information.
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What types of accounts payable invoice matching can you use in Microsoft Dynamics AX 2012? (Choose all that apply.) A. three-way matching B. four-way matching C. charges matching D. sales order matching
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-three-way matching -charges matching
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In Microsoft Dynamics AX 2012, when can you use the cross-rate functionality in the Accounts Receivable Settle open transaction form? A. When the customer is making an advance payment. B. When the invoice currency and payment currency are different. C. When the invoice currency and paymen…
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In Microsoft Dynamics AX 2012, a customer has a credit balance in a customer account, but does not have a vendor account. You need to repay the credit balance. What should you do? A. Create a reason code in the Accounts Receivable module and then repay the credit balance. B. Repay the cre…
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In Microsoft Dynamics AX 2012, a customer has a credit balance in a customer account, but does not have a vendor account. You need to repay the credit balance. What should you do? A. Create a reason code in the Accounts Receivable module and then repay the credit balance. B. Repay the cre…
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Repay the credit balance by using a one-time vendor account automatically created by the system.
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In Microsoft Dynamics AX 2012, what is two-way invoice matching? A. Matching the price information on the invoice to the price information on the purchase order. B. Matching the quantity information on the invoice to the quantity information on the purchase order. C. Matching the quantity…
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Matching the price information on the invoice to the price information on the purchase order.
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In Microsoft Dynamics AX 2012, what is budget control functionality? A. incremental budgeting B. zero-based budgeting C. a process in the Workflow Management module D. a method of ensuring that sufficient budget funds are available for planned or actual purchases
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a method of ensuring that sufficient budget funds are available for planned or actual purchases
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In Microsoft Dynamics AX 2012, which of the following statements about encumbrance accounting (also known as commitment accounting) are true? (Choose all that apply.) A. To use encumbrance accounting, posting definitions are required. B. Closing purchase order encumbrances is part of the …
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-To use encumbrance accounting, posting definitions are required. -When the pre-encumbrance process is enabled, the encumbrance process is required.
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On which Microsoft Dynamics AX 2012 list page can you view cash flow forecasts? A. All customers B. All sales orders C. All production orders D. All purchase requisitions
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All sales orders
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You need to set up the Microsoft Dynamics AX 2012 chart of accounts for intercompany transactions. Which ledger account type should you specify for the Due to and Due from ledger accounts? A. Balance sheet B. Profit and loss C. Reporting D. Revenue
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Balance sheet
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You need to set up the main account so that the ledger transactions posted to that account are available for the foreign currency revaluation process. In the Microsoft Dynamics AX 2012 Main account form, which fields should you select? (Choose all that apply.) A. Consolidation account B. …
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-Foreign currency revaluation -Monetary
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You need to post an intercompany general ledger journal. In Microsoft Dynamics AX 2012, what should you set up to enable intercompany posting? (Choose all that apply.) A. Set up the intercompany journal name in both companies. B. Set up the intercompany journal name in only one company. C…
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-Set up the intercompany journal name in both companies. -Set up the intercompany posting accounts in both companies.
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You need to process exchange rate adjustments on eligible main accounts. In Microsoft Dynamics AX 2012, what should you do? A. Use the periodic General Ledger function Foreign currency revaluation. B. Use the periodic Accounts Payable function Foreign currency revaluation. C. Use the peri…
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In Microsoft Dynamics AX 2012, which of the following is a mandatory step when posting bridging accounts? A. Set up approvals. B. Post the closing account. C. Attach a ledger accrual to the journal line. D. Post a payment to a temporary main account.
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In Microsoft Dynamics AX 2012, which of the following is a mandatory step when posting bridging accounts? A. Set up approvals. B. Post the closing account. C. Attach a ledger accrual to the journal line. D. Post a payment to a temporary main account.
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Post a payment to a temporary main account.
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You need to set up electronic vendor payments in Microsoft Dynamics AX 2012. What should you do first? A. Set up methods of payment in Accounts Receivable. B. Set up and configure electronic bank accounts in Cash and Bank Management. C. Set up and configure electronic customer bank accoun…
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Set up and configure electronic bank accounts in Cash and Bank Management.
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In Microsoft Dynamics AX 2012, which of the following is a requirement for using centralized payments? A. The currency codes in both companies must be the same. B. Companies must be connected in an organizational hierarchy. C. The posting profile IDs for each of the companies must be uniq…
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Companies must be connected in an organizational hierarchy.
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You need to import an electronic bank confirmation for a vendor payment. In Microsoft Dynamics AX 2012, which form should you use? A. Bank journal B. General ledger journal C. Payment journal D. Payment transfer journal
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Payment transfer journal
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You need to set up Foreign Currency Consolidation in Microsoft Dynamics AX 2012 to automatically post differences that result from consolidating subsidiaries with foreign currencies. What should you set up in the General Ledger? A. rounding rules in the Currencies form B. an account for a…
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an account for automatic Balance account for consolidation differences transactions
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You need to remove consolidation transactions in Microsoft Dynamics AX 2012. What should you do? A. In the Consolidation form, click the Delete button. B. In the Consolidation form, click the Remove transactions button. C. In the consolidation account transactions, click the Reverse trans…
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In the Consolidation form, click the Remove transactions button.
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Which of the following statements about Microsoft Dynamics AX 2012 elimination journal proposals are true? (Choose all that apply.) A. An elimination journal proposal posts automatically. B. An elimination journal proposal can be run only once. C. An elimination journal proposal displays …
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-An elimination journal proposal displays a preview of the results of elimination. -An elimination journal proposal enables you to validate the results of elimination.
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Which of the following statements about customer account statements in Microsoft Dynamics AX 2012 are true? (Choose all that apply.) A. A customer account statement displays only transactional data for a period. B. In a multi-company environment, a customer account statement can include t…
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-In a multi-company environment, a customer account statement can include transactional data for multiple companies. -If a customer account statement includes multiple currencies, the statement displays the opening and closing balance for each currency.
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Your company plans to charge interest on customer overdue payments. You set up the required interest codes in Microsoft Dynamics AX 2012. What is the next step? A. Apply the interest codes to customer groups. B. Apply the interest codes to the customer master. C. Apply the interest codes …
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Apply the interest codes to customer posting profiles.
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Which of the following statements about financial workflows in Microsoft Dynamics AX 2012 is true? A. There is one workflow type for each module. B. A workflow configuration is based on a workflow type. C. A workflow configuration is based on a workflow style. D. Within each workflow conf…
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A workflow configuration is based on a workflow type.
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In Microsoft Dynamics AX 2012, which additional user interface element exists when a workflow approval is set up for a journal? A. A yellow information bar. B. A green arrow to start the workflow. C. A Justify button in the action pane. D. A Validate button in the action pane.
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A yellow information bar.
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When posting year-end transactions in Microsoft Dynamics AX 2012, which posting layer is designed for the closing sheet? A. Closing B. Current C. Opening D. Operations
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Current
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Which of the following actions can you perform when defining the fiscal year end close parameters in Microsoft Dynamics AX 2012? A. Delete close-of-year transactions during transfer. B. Create an opening balance for the new fiscal year. C. Set the period status to current for new fiscal p…
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Delete close-of-year transactions during transfer.
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In Microsoft Dynamics AX 2012, which of the following can you analyze by using the Dimension statement? (Choose all that apply.) A. budget transactions B. cash flow forecast transactions C. customer balances D. General Ledger transactions E. vendor balances
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-budget transactions -cash flow forecast transactions -General Ledger transactions
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In Microsoft Dynamics AX 2012, how can you identify errors and duplicates in a row definition structure before you update the existing structure? A. In the General Ledger module, run the Audit trail report. B. Run the Where used report on the Row definitions form. C. In the System Adminis…
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In the Structure designer form, select the Check check box and the Simulate check box.
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What is the first step in the process of creating a new financial statement in Microsoft Dynamics AX 2012? A. Create a row definition. B. Create a dimension set. C. Design the financial statement row structure. D. Create the financial statement column definition.
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Create a dimension set.
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In Microsoft Dynamics AX 2012, what process allows you to view inconsistencies at the bottom of a printed financial statement? A. Create an exception row type in the row definition. B. Create a dimension set section in the row definition. C. Print the footer section of the financial state…
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Create an exception row type in the row definition.
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In Microsoft Dynamics AX 2012, how can you assign fixed asset numbering? (Choose all that apply.) A. manually B. automatically based on value models C. automatically based on fixed asset groups D. automatically based on a fixed asset calendar
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-manually -automatically based on fixed asset groups
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In Microsoft Dynamics AX 2012, which of the following statements must be true in order to edit the calendar attached to a Depreciation book? A. No journals or transactions with any status exist for the Depreciation book. B. No journals or transactions with an Open status exist for the Dep…
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No journals or transactions with any status exist for the Depreciation book.
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In Microsoft Dynamics AX 2012, where can you review value models that are linked to a fixed asset? A. In the corresponding main account. B. In the Fixed asset group form. C. In the Fixed asset parameters form. D. In the Fixed asset posting profile form.
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In the Fixed asset group form.
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Which of the following statements about the Microsoft Dynamics AX 2012 Depreciation book is true? A. The Depreciation book cannot be re-run while the periods are open for the Depreciation book. B. The Depreciation book can be re-run only one time before the periods are closed for the Depr…
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The Depreciation book can be re-run as many times as necessary while the periods are open for the Depreciation book.
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In Microsoft Dynamics AX 2012 which journal type should you use in the Journal name form if budgets for fixed assets are required? A. Daily B. Periodic C. Post fixed asset D. Fixed asset budget
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Fixed asset budget
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You enter a new fixed asset, number FUR-ELC000136, in Microsoft Dynamics AX 2012. When you validate the acquisition journal for the new fixed asset, the system displays the following message: Account for the transaction type, value model, does not exist for fixed asset FUR-ELC000136. What…
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The main account for the acquisition transaction type does not exist in the fixed asset posting profile.
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In Microsoft Dynamics AX 2012, where do you set up the capitalization threshold? A. In the Fixed Asset groups. B. In the Inventory parameters. C. In the Inventory item groups. D. In the General Ledger main accounts.
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In the Fixed Asset groups.
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Which of the following statements about value models for fixed assets in Microsoft Dynamics AX 2012 is true? A. Value models are a subset of the value of a fixed asset. B. Value models are optional when setting up depreciation for a fixed asset. C. Value models connect all financial infor…
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Value models connect all financial information about fixed assets.
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You need to record fixed asset transactions by using journals. In Microsoft Dynamics AX 2012, what should you do? A. Create transaction text with the type Fixed asset Posting, Ledger. B. In the General Ledger, create a journal for a Depreciation book. C. In the General Ledger, create a jo…
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In the General Ledger, create a journal name with the journal type Post fixed assets.
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You set up an asset in Microsoft Dynamics AX 2012. What is the initial status of the value model? A. Open B. Closed C. Suspended D. Not yet acquired
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Not yet acquired
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You need to assign bar codes to fixed assets in Microsoft Dynamics AX 2012. What should you do? A. Set up special number sequences on each fixed asset group. B. Set up number sequences on Inventory module parameters. C. Set up number sequences on General Ledger module parameters. D. Set u…
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Set up special number sequences on each fixed asset group.
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You set up a fixed asset in Microsoft Dynamics AX 2012. You select the Allow asset acquisition from purchasing fixed asset parameter. What is the initial status of the fixed asset? A. Open B. Scrapped C. Suspended D. Not yet acquired
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Open
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You need to automatically create a fixed asset from a purchase order when an invoice is posted. In Microsoft Dynamics AX 2012, which of the following actions should you perform? A. Configure the fixed asset posting profile. B. Configure the fixed asset acquisition methods. C. Select the A…
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Select the Create asset during product receipt or invoice posting fixed asset parameter.
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You need to loan fixed assets in Microsoft Dynamics AX 2012. What should you do? A. Use the fixed asset journal. B. Use the inventory to fixed assetjournal. C. Use the Loaned equipment periodic function. D. Click the Lend button on the Fixed asset form.
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Click the Lend button on the Fixed asset form.
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In Microsoft Dynamics AX 2012, you enter a fixed asset that is associated with a project into the Project form. Which project types can you use for the fixed asset? (Choose all that apply.) A. Cost B. Fixed price C. Internal D. Investment E. Time F. Time and material
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-Cost -Internal -Investment
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In Microsoft Dynamics AX 2012, where do you enter a budget for a fixed asset? A. In the fixed asset journal. B. In the Fixed asset group form. C. In the Fixed asset parameters form. D. In the fixed asset budget journal and directly on each fixed asset.
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In the fixed asset budget journal and directly on each fixed asset.
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In Microsoft Dynamics AX 2012, which transaction type can be used for fixed asset disposal? A. Acquisition adjustment B. Depreciation adjustment C. Provision for reserve D. Write down
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Provision for reserve
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You need to enter fixed asset acquisitions into Microsoft Dynamics AX 2012. Where can you do this? A. In the general journal of the General Ledger module. B. In the payment journal of the Accounts Payable module. C. In the payment journal of the Accounts Receivable module. D. In the Free …
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In the general journal of the General Ledger module.
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In Microsoft Dynamics AX 2012, you generate a fixed assets acquisition transaction directly from a purchase order invoice. Where will the associated General Ledger postings be made? A. To only the Fixed asset issue account. B. To only the Fixed asset receipt account. C. To only the Fixed …
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To the Fixed asset issue and Fixed asset receipt accounts.
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In Microsoft Dynamics AX 2012, which of the following statements about depreciation for assets that have not yet been acquired is true? (Choose all that apply.) A. You cannot post depreciation for the assets. B. You can post depreciation for the assets by using depreciation proposals. C. …
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-You cannot post depreciation for the assets. -You can generate depreciation for the assets by using depreciation proposals and specifying a future posting date.
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In Microsoft Dynamics AX 2012, which fixed asset transaction type can post simultaneously with standard fixed asset depreciation? A. Bonus depreciation B. Depreciation adjustment C. Extraordinary depreciation D. Summarize depreciation
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Extraordinary depreciation
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In Microsoft Dynamics AX 2012, which fixed asset transaction can you process in the Free text invoice form? A. Acquisition B. Acquisition adjustment C. Disposal sale D. Disposal scrap
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Disposal sale
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Which type of fixed asset value adjustment is available in Microsoft Dynamics AX 2012? A. Disposal sale B. Disposal scrap C. Provision for reserve D. Write up adjustment
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Write up adjustment
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Economy
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a system for coordinating society's productive activities
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Economics
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the social science that studies the production, distribution, and consumption of goods and services
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Market Economy
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economy in which decisions about production and consumption are made by individual producers and consumers
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Market Economy
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individuals are free to choose about production and consumption
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Invisible Hand
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refers to the way in which the individual pursuit of self-interest can lead to good results for society as a whole
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Microeconomics
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branch of economics that studies how people make decisions and how these decisions interact
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Microeconomics
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The Study of how INDIVIDUAL households and firms make decisions, interact with one another in markets
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Market Failure
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when the individual pursuit of self-interest leads to bad results for society as a whole
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Recession
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downturn in the economy
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Macroeconomics
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branch of economics that is concerned with overall ups and downs in the economy
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Macroeconomics
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the economy usually on the national scale
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Economic growth
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growing ability of the economy to produce goods and services
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Individual choice
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decision by and individual of what to do, which necessarily involves a decision of what not to do
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Resource
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anything that can be used to produce something else
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Resources
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Anything such as land labor, and capital, that can be used to produce something else
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Scarce
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not enough of the resources available to satisfy all the various ways a society what to use them
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Opportunity Cost
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"real cost of an item
what you must give up in order to get it"
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Opportunity Cost
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What you give up in order to get something else
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Trade-off
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comparing the costs with the benefits of doing something
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Trade
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provide goods and services to other and receive goods and services in return
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Marginal Decisions
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decisions about whether to do a bit more or a bit less of an activity
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Marginal Analysis
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the study of the decision whether to do a bit more or a bit less of an activity
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Marginal analysis
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"study of decisions about whether to do a bit more or a bit less
ex: do I come to class, or sleep in"
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Incentives
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anything that offers rewards to people who change their behavior
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Interaction (of choices)
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my choices affect your choices - feature of most economic situations
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Gains From Trade
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people can get more of what they want through trade than they could if they tried to be self-sufficient
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gains from trade
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we can get more of what we want by trading than from being self-sufficient
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Specialization
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each person specializes in the task that he or she is good at performing
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Equilibrium
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when no individual would be better off doing something different
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Equilibrium
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"-point where the demand curve and the supple curve intersect
-an economic situation in which no individual would be better off doing something different"
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Efficient
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if the economy takes all opportunities to make some people better off without making other people worse off
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Efficiency
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"when an economy takes all opportunities to make some people better off without making other people worse off
ex: moving a large class to a large classroom"
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Equity
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everyone gets his or her fair share. (isn't as well defined as efficiency)
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Equity
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everyone gets his or her fair share
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Three Levels of Economic Understanding
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"1. how individuals interact
2. how these choices interact
3. how the economy functions overall"
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Markets lead to ...
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Efficiency, with some well-defined exceptions
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When markets don't achieve efficiency, ...
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government intervention can improve society's welfare.
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One person's spending is...
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another person's income
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What leads to a recession?
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overall spending in the economy getting out of line with the economy's productive capacity
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Governments have the ability to ..
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"strongly affect overall spending,
an ability they use in an effort to steer the economy between recession and inflation"
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Model
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simplified representation of a real situation that is used to better understand real-life situations
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Production Possibility Frontier
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"illustrates the trade-offs facing an economy that produces only two goods
it shows the maximum quantity of one good that can be produced for any given quantity produced of the other."
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Factors of production
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resources used to produce goods and services
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Technology
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technical means for producing good and services
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Comparative Advantage
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an individual producing a good or service if the opportunity cost of producing the good or service is lower for that individual than for other people
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Comparative Advantage
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The advantage an individual has in producing a good or service if the opportunity cost of producing the good or service is lower for that individual than for other people
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Absolute advantage
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an individual in an activity if he or she can do it better than other people. (different from comparative advantage.)
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Barter
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people directly exchange goods or services that they have for good or services that they want
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represents the transactions in an economy by flows around a circle
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represents the transactions in an economy by flows around a circle
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household
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person or a group of people that share their income
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Firm
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organization that produces goods and services for sale
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Markets for goods and services
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firms sell good and services they they produce to households in...
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Factor Markets
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Firms by the resources they need to produce good and services in...
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Income Distribution
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way in which total income is divided among the owners of the various factors of production
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Positive Economics
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branch of economic analysis that describes the way the economy actually works
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Normative Economics
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makes prescriptions about the way the economy should work
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Forecast
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simple prediction of the future
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Causal Relationship
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exists between two variables when the value taken by one variable directly influences or determines the value taken by the other variable
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Independent Variable (in a causal relationship)
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the determining variable
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Dependent Variable (in a casual relationship)
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variable the independent variable determines
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Curve
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"a line on a graph that depicts a relationship between two variables.
(it may be either a straight line or a curved line)"
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Linear Relationship
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the curve is a straight line, the variables have a ....
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Nonlinear Relationship
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the curve isn't a straight line, the variables have a ...
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Positive Relationship
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two variables show a slope upward to the right
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Negative Relationship
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two variables show a slope downward to the right
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Nonlinear Curve
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one in which the slope is not the same between every pair of points
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Tangent Line
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"straight line that just touches or is tangent to a nonlinear curve a a particular point
(the slope of the line is equal to the slope of the nonlinear curve at that point)"
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Time-series Graph
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has dates on the horizontal axis and values of a variable that occurred on those dates on the vertical axis
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Scatter Diagram
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"shows pints that correspond to actual observations of the x- and y-variables.
(usually a curve is fitted to the graph)"
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Truncated
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an axis is truncated when some of the values on the axis are omitted (usually to save space)
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Omitted Variable
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unobserved variable that, through its influence on other variables, creates the erroneous apperance of a direct causal relationship among those variables
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Reverse Causality
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error of reverse causality is committed when the true direction of causality between two variables is reversed
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Competitive Market
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Market in which there are many buyers and sellers of the same good or service, non of whom can influence the price at which the good or service is sold
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Supply and Demand Model
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A model of how a competitive market works
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Demand schedule
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Shows how much of a good or service consumers will want to buy at different prices
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Quantity demanded
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The actual amount of a good or service consumers are willing to buy at some specific price
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Demand curve
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Graphical representation of the demand schedule. Shows the relationship between quantity demanded and price
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Law of demand
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Says that a higher price for a good or service, other things equal, leads to people demand a smaller quantity of that good or service
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Law of Demand
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as price goes up demand goes down
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Shift of the demand curve
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A change in the quantity demanded at any given price, represented by the change of the original demand curve to a new position, denoted by a new demand curve
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Movement along the demand curve
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Change in the quantity demanded of a good that is the result of a change in that good's price
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Substitutes
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If a rise in the price of one good leads to an increase in the demand for the other good
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Complements
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If a rise in the price of one good leads to a decrease in the demand for the other good
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Normal good
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When a rise in income increases the demand for a good (the normal case)
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Normal Good
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a good income increases the demand for that good-the "normal" case
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Normal good
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A good for which a rise in income increases the demand for that good
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Inferior good
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When a rise in income decreases the demand for a good
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Inferior Good
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a good for which a rise in income decreases the demand for the good
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Individual demand curve
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Illustrates the relationship between quantity demanded and price for an individual consumer
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Quantity supplied
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The actual amount of a good or service producers are willing to sell at some specific price
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Supply schedule
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Shows how much of a good or service producers will supply at different prices
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Supply curve
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Shows the relationship between quantity supplied and price
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Supply Curve
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A graphical representation of a supply schedule
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Shift of the supply curve
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Change in the quantity supplied of a good or service at any given price.Represented by the change of the original supply curve to a new position, denoted by a new supply curve.
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Movement along the supply curve
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Change in the quantity supplied of a good that is the result of a change in that good's prices
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Input
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Good or service that is used to produce another good or service
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Individual supply curve
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Illustrates the relationship between quantity supplied and price for an invisibility producer
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Equilibrium price (market-clearing price)
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Price that matches the quantity supplied and the quantity demanded
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Equilibrium quantity
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Quantity bought and sold at that price
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Surplus
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When quantity supplied exceeds the quantity demandedWhen price is above equilibrium level
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Surplus
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An extra amount of a good
QS>QD
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Shortage
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When the quantity demanded exceeds the quantity suppliedHappen when price is below it's equilibrium level
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Shortage
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A situation in which a good or service is temporarily unavailable
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Five main factors that shift the supply curve
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Change in input pricesChange in prices of related goods and services
Change in technology
Change in expectations
Change inthe number of producers
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Five main factors that shift the demand curve
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Substitutes or complimentsChange in income
Change in tastes
Change in expectations
Change in the number of consumers
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Increases in demand increases what?
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Both the equilibrium price and quantity(And vice versa)
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Economics
2 Definitions
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-Book-the Social science that studies the production, distribution, and consumption of goods and services
-Alfred Marshall- Ordinary business of life
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Command Economy
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Central authority chooses the production and consumption decisions of individuals
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Scarcity
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-in short supply
Example- When a…
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Scarcity
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Resources are scarce
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Choice
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Selecting an item or action from a set of alternatives.because goods and services are limited,decisions are made by price,quality,desire,ect.
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Resource Allocation
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Goals help managers decide where they need to allocate resources, such as employees, money, and equipment.
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Marginal Decisions and Marginal Analysis
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Decisions about whether to do a bit more or a bit less of an activity are marginal decisions. The study of such decisions is known as marginal analysis
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Gains from Trade and Specialization
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There are gains from trade: people can get more of what they want through trade than they would if they tried to be self-sufficient. This increase in output is due to specialization: each person specializes in the that he or she is good at performing.
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Efficiency vs Equity
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Efficiency - Maximizing resources and production
Equity - Fair distribution of resources
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Ceteris Paribus assumption
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The assumption that nothing changes except the factor or factors being studied.
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Complementary Good
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Example Hamburgers and Fries
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Substitue good
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alternative product/good that can be used instead of another
Example Hamburger and Hotdog
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Consumer Surplus
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A term often used to refer both to individual consumer surplus and to total consumer surplus
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Producer Surplus
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Is the difference between what a producer has paid for a good and the cost of producing one unit of that good.
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Social Surplus
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Consumer surplus + producer surplus + everyone else's surplus
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Price Ceiling
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The maximum price sellers are allowed to charge for a good or service
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The minimum price buyers are required to pay for a good or service; a form of price control
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The minimum price buyers are required to pay for a good or service; a form of price control
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Wealth Transfer
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The movement of money from one entity to another.
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Deadweight Loss
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The loss in total surplus that occurs whenever an action or a policy reduces the quantity transacted below the efficient market equilibrium quantity
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Economics
(book)
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The social science of production, distribution and consumption of goods and services
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Economics
(Bowden)
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The study of how individuals/human beings satisfy/try to satisfy their infinite desires in a world that is finite
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Economics
(vocab)
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Production, consumption, distribution/allocation, desires=demands, goods and demands for goods does not include any sort of valuation of intrinsic value (in theory)
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Study Guide