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Microecon-page 23
Up to page 23 in notes
| Question | Answer |
|---|---|
| Economics | Social science,concerned with how ppl + firms + governments choose to allocate scarce recources |
| Opportunity cost | value of resource in its next best use. Ex. Cost of free checking |
| Rational behavior | when facing options, choose the one you think is best. |
| Importance of Marginal analysis | value/cost of next unit. Ex. airplane seat |
| Externality | someone not involved in transaction that suffers or benefits ex.basketball hoop |
| Cost disease of personal services | productivity (output produced) has stayed the same. Productivity in others sectors determine wages even in sectors with no productivity gain. (higher income, higher opportunity cost) |
| Trade off between output and equality | When operating efficiently, policies that stimulate growth make distribution less equal, policies designed to lead to more equality slows growth. |
| Economic model | simplification of an economic activity, either in graphs, or words, used to explore the direction of resource allocations |
| X and Y are positively related | same direction, x goes up, so does y.Slope is positive |
| X and Y are negatively related | opposite directions, x goes up, y goes down. Slope is negative |
| Linear form of function | straight line, no exponents. Y=ax+b, a is vertical, b=slope of line (rate of change) |
| Intersection | set y's equal to each other |
| Resources | land, labor, materials (things used to make something else, but are used up), capital (used repeatedly to make something else) |
| economic vs financial capital | money, stocks, CDs, bonds, etc. are not economic capital |
| depreciation | subtraction from the capital stock |
| Investment | additions to the capital stock |
| Market system | resources are allocated via no interactions of individual agents and firms. All acting in their own best interest |
| Market economy | resources go to the agents that value them the most in terms of money (value depends on needs, wants and income) |
| quantity demanded | how much buyers want to (and have the means to) buy at a given price |
| demand | all of the quantities demanded at the different prices, holding everything else equal |
| demand vs. quantity demanded | quantity demanded changes when the price changes, demand doesn't |
| demand curves | downward sloping, price of quantity demanded are inversely related |
| Law of demand | as price goes up, quantity demanded goes down |
| normal good | as income goes up, demand goes up. Income and demand move in the same direction |
| Inferior good | as income increases, demand increases |
| Complements | if price of complement goes up/down, demand of your good goes down/up |
| Substitutes | if price of substitute goes up/down, demand for your good goes up/down (ex.coke, pepsi) |
| Giffen good | violates law of demand (as price goes up, quantity demanded goes up) |
| Market demand is | the horizontal sum of all of the individuals' demand curve |
| quantity supplied | amount sellers want to and are legally able to sell at a given price |
| market supply | horizontal sum of individual supply curves |
| supply curves | slope upwards |
Created by:
KSiobhan
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