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College Econ
| Term | Definition |
|---|---|
| Economics | study of how people allocate their limited resources to satisfy their unlimited wants |
| Macroeconomics | study of the behavior of the economy as a whole |
| Microeconomics | study of decision making undertaken by individuals and firms |
| Positive economics | analysis using either purely descriptive statements or scientific predictions |
| normative economics | analysis using value judgments about economic policies; relates to whether outcomes are good or bad |
| 3 fundamental ?'s | What and How much will be produced? How will items be produced? For whom will items be produced? |
| scarcity | not enough resources to produce products |
| Production possibilites curve | a curve representing all possible combinations of maximum outputs that could be produced |
| absolute advantage | ability to produce more units of a good or service using a given quantity of labor or resource inputs |
| comparative advantage | ability to produce a good or service at a lower opportunity cost compared to other producers |
| efficiency | Case in which a given level of inputs is used to produce the maximum output possible. Alternatively, the situation in which a given output is produced at minimum cost |
| Inefficiency | Any point below the production possibilities curve, at which the use of resources is not generating the maximum possible output |
| Opportunity costs | Costs-Highest-valued, next-best alternative that must be sacrificed to obtain something or to satisfy a want |
| growth | increase of supply curve |
| Law of demand | The observation that there is a negative, or inverse, relationship between the price of any good or service and the quantity demanded, holding other factors constant |
| Law of supply | The observation that the higher the price of a good, the more of that good sellers will make available over a specified time period, other things being equal |
| equilibrium | The situation when quantity supplied equals quantity demanded at a particular price |
| determinants of demand | income, tastes and preferences, prices of related goods, expectations, market size |
| change in demand | shift in demand curve |
| change in quantity demand | shift in point on demand curve |
| determinants of supply | cost of inputs, technology and productivity, taxes and subsidies, price expectations, #of firms in the industry |
| price ceilings | legal maximum price |
| price floors | legal minimum price |
| externality | consequence of an economic activity that spills over to affect third parties. |
| public goods | goods for which the principle of rival consumption does not apply, jointly consumed by many people at a time |
| transfer payments | Money payments made by governments to individuals for which no services or goods are returned, Social Security and Unemployment |
| theory of public choice | study of collective decision making |
| econ. functions of gov | providing legal system, promoting competition, providing public goods, ensuring economy wide stability |
| 3 econ responsibilities of 1946 full employment act | full employment, price stability, econ.growth |
Created by:
tessa.cooper
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