Section 1
concentrates on individual behavior and the operation of particular markets
Goods for which the quantity demanded falls as income rises
What are inferior goods?
Used to describe the use of economic analysis to guide decisions about what should be as opposed to what is the case
What is normative economics?
Total output divided by the quantity of labor employed in its production
What is average labor productivity?
long-lived goods that are themselves produced and are used to produce other goods and services, but aren't used up in the production process
What are capital goods?
Uses the tools of economic analysis to describe and explain economic phenomena and to make predictions about what will happen under particular circumstances
What is positive economics?
The case of a market with a small number of sellers, so that sellers have market power
What is imperfect competition?
Purchase of new homes and apartment buildings
What is residential fixed investment?
The proposition that if private parties can bargain without cost over the allocation of resources, then they can solve the problem of externalities on their own
What is Coase Theorem?
Unemployment caused by the lack of jobs during a recession
What is cyclical unemployment?
insured individuals will consume health care goods of low marginal utility because they cannot determine if the good is necessary or not
What is moral hazard?
an index constructed by comparing the cost of purchasing a fixed basket of goods at different time; measures the cost of purchasing a market basket of goods and services intended to be representative of the consumption of a typical consumer
What is the Consumer Price Index (CPI)?