ECO 365
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| MARGINAL COST | It is the cost of producing one more unit of a good
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| MARGIANL BENIFIT | the additional benefit from increasing consumption by one unit
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| OPPORTUNITY COST | is the value of the next best alternative foregone as the result of making a decision.[
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| SUPPLY & DEMAND | Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand r
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| MARGINAL UTILITY | is the additional satisfaction, or amount of utility, gained from each extra unit of consumption EXAMPLE you eat more chocolate bars, the pleasure of each additional chocolate bar will be less than the pleasure you received from eating the one before - pr
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| ECONOMIES OF SCALE | are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as output rises
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| ELACTICITY | elasticity is the ratio of the percent change in one variable to the percent change in another variableAn "elastic" good is one whose price elasticity of demand has a magnitude greater than one. Similarly, "unit elastic" and "inelastic" describe goods wit
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| CONSUMER SOVEREIGNTY | It is the power of consumers to decide what gets produced. In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers as what to produce (and how much).
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| FACTORS OF PRODUCTION | (or productive inputs) are the resources employed to produce goods and services. generally land, labor, and capital; the three groups of resources that are used to make all goods and services
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| PRICE MECHINISMS | System of interdependence between supply of a good or service and its price. It generally sends the price up when supply is below demand, and down when supply exceeds demand. Price mechanism also restricts supply when suppliers leave the market due to low
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| INVISABLE HAND | no regulation of any type would be needed to ensure that the mutually beneficial exchange. of goods and services took place, since this "invisible hand" would guide market participants to trade in the most mutually beneficial manner
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| DIFFRENCE BETWEEN MOVEMENTS ALONG SUPPLY AND DEMAND CURVE | A change in the quantity demanded is represented by a movement along the demand curve, while a change in the demand is represented by a shift of the curve (towards the left in case of a decrease and towards the right in case of an increase).
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| TAXATION POLICY-ADVANTAGES,DISADVANTAGES,& TWO PRICIPLES |
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| LAW OF DEMAND | states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good.The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the
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| LAW OF SUPPLY | demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied
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| Monopoly | enterprise that is the only seller of a good or service. In the absence of government intervention, a monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit
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| OLIGOPOLY | A situation in which a particular market is controlled by a small group of firms
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| MONOPOLISTIC COMPETION | All firms produce similar yet not perfectly substitutable products.2. All firms are able to enter the industry if the profits are attractive.3. All firms are profit maximizers.4. All firms have some market power, which means none are price takers
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| PERFECT COMPETITION | Perfect competition is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many substitutes. Perfect competition means there are few, if any, barriers to entry for new companies, and prices are determined b
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| TARIFF | tax imposed on goods when they are moved across a political boundary.policy of restraining trade between nations
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| IMPORT QUOTAS | sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. It is a limit on the amount of the good that can be imported.
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| Demand Shifts | a shift of the demand curve is a change in the quantity demanded at any given price if consumers want more of the good at any given price,the curve shifts to the rightif consumers want to buy less of a good at any given price,the curve shifts to the l
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| Supply Shifts | is a change in the quantity supplied of a good at any given price represented by a change in the position of the supply curve.if the supply increases, the supply curve shifts to the right- if the supply dec reases, the supply shifts left
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