Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Econ Ch. 1-3
| Question | Answer |
|---|---|
| Economics | The study of how people make choices under scarcity and the results of these choices to society |
| Scarcity Principle | People have unlimited wants and limited resources |
| Economic Surplus | ES = benefit - cost |
| Opportunity Cost | The value of what must be foregone in order to undertake an activity |
| Sunk Costs | Costs that cannot be recovered |
| Marginal Cost | Increase in total cost from one addition unit of an activity |
| Average Cost | (Total cost) / (number of units) |
| Marginal Benefit | Increase in total benefit from one additional unit of an activity |
| Average Benefit | (Total benefit) / (number of units) |
| What is the incentive principle? | Incentives are central to people's choices |
| Microeconomics | Studies choice and its implications for price and quantity in individual markets |
| Macroeconomics | Studies the performance of national economies and the policies that governments use to try to improve that performance |
| Cost-Benefit Principle | An individual/firm/society should take an extra action if the extra benefits from taking the action are at least as great as the extra costs |
| Rational Person | Someone with well-defined goals who tries to fulfill those goals as best they can |
| What is the key to using the Cost-Benefit Principle correctly? | Recognizing what taking an action prevents us from doing |
| Marginal Costs and Benefits | Measures that correspond to the increment of activity under consideration |
| Absolute Advantage | When a person can perform a task quicker than another person |
| Comparative Advantage | When a person can perform a task with a lower opportunity cost than another person |
| Principle of Comparative Advantage | Everyone does best when each person/country concentrates on the activities for which their opportunity cost is the lowest |
| Production Possibilities Curve (PPC/PPF) | Illustrates the combinations of two goods that can be produced with given resources |
| Outsourcing | Service work performed overseas by low wage workers |
| Principle of Increasing Opportunity Cost (Low-Hanging Fruit Principle) | In expanding the production of any good, first employ those resources with the lowest opportunity cost and then turn to resources with higher opportunity costs |
| Demand Curve | Illustrates the quantity buyers would purchase at each possible price |
| Buyer's Reservation Price | The highest price an individual is willing to pay for a good |
| Substitution Effect | Buyers switch to substitutes when price goes up |
| Income Effect | Buyers' overall purchasing power goes down if prices go up |
| Supply Curve | Illustrates the quantity of a good that sellers are willing to offer at each price |
| Seller's Reservation Price | Lowest price the seller would be willing to sell for |
| Equilibrium | When there is no tendency for a system to change |
| Equilibrium Price | The price at which the supply and demand curves intersect |
| Equilibrium Quantity | The quantity at which the supply and demand curves intersect |
| Market Equilibrium | Occurs when all buyers and sellers are satisfied with their respective quantities at the market price |
| Price Ceiling | A maximum allowable price, set by law |
| Price Floor | A minimum allowed price, set by law |
| What does a change in quantity demanded result from? | A change in the price of a good |
Created by:
archergirl
Popular Economics sets