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Intro to Economics
Mrs. Barlaz's Civics and Economics class
| Term | Definition |
|---|---|
| Economics | a system for analyzing the production and distribution of goods and services |
| Microeconomics | the market behavior of individual consumers and businesses, interactions between buyers and sellers, and the factors that influence their choices |
| Incentive | a factor that motivates an individual to act a certain way |
| Macroeconomics | the performance, structure, and behavior of the economy as a whole |
| Gross Domestic Product (GDP) | the values of all officially recognized final goods and services produced within a country |
| Scarcity | unlimited wants/needs for limited resources -> forces economic decisions |
| Prices increase | What happens to the prices of scarce resources? |
| Diamonds, Doctors | What are some examples of enforced scarcity? |
| Increase prices | What is the goal of enforced scarcity? |
| Opportunity Costs | the value of what we cannot have in order to have something else (the value of the thing we lose) |
| Scarcity | _________ forces us to make economic decisions |
| Utility | usefulness or benefit of a product |
| Unit | product or service |
| Marginal utility | the utility you get from owning/consuming each unit |
| Law of Diminishing Marginal Utility | the utility goes down as more units are bought |
| Marginal utility; marginal cost | In order for you to buy something, the _______ ____ must outweigh the _______ ____ |
| Marginal Cost | the cost of each (additional) unit |
| Demand | the quantity of a product or service that is desired by buyers |
| Individual Demand | demand for one consumer |
| Market/Aggregate Demand | demand for an entire market |
| Quantity Demanded | how much people are willing to buy at a certain price |
| Law of Demand | when the price of a good is raised, demand will decrease |
| Elasticity of Demand | the degree to which as demand curve reacts to a change in price |
| Elastic Demand | each change in price causes a relatively larger decrease in quantity demanded |
| Elastic | A product if considered __________ if the demand changes drastically in relation to price; the density curve will be more horizontal |
| Inelastic | A product is considered ___________ if the price does not have a big impact on demand (in other words, there is a high need and there are no substitutes); the density curve will be vertical |
| Perfect Elasticity of Demand | if the quantity demanded changes by a very large percentage as a result of a tiny percentage change and price |
| Perfect Inelasticity of Demand | the quantity demanded will never change, regardless of price (no substitute, can't postpone, can't buy when cheap and can't save for later) |
| Supply | the quantity of good and services that producers are willing to sell |
| Individual Supply | supply for one producer |
| Market/Aggregate Supply | supply for all the producers in market |
| Quantity Supply | how much suppliers are willing to supply at a given price |
| Law of Supply | as the price, or total cost to buy a product, increases, the producers will produce more of the product or service |
| Elasticity of Supply | the degree to which the quantity of a good or service reacts to changes in price |
| Elasticity of supply | the quantity supplied changes significantly in relation to price |
| Inelasticity of supply | the quantity supplied will not or cannot change significantly when there is a change in price |
Created by:
hillbilly777
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