Fundamentals
concerns that are entirely consistent with rational decision making
What is Rationality? (page 7)
this is comprised of all the buyers and sellers of a particular good or service
What is Market? (page 10)
the market value of final goods and services produced in an economy during a specified period of time
What is the Gross Domestic Product? (page 64)
the preference for prospects (or lotteries) that feature lower variance or certainty over prospects that have the same mean outcome but greater variance in outcomes
What is Risk Aversion? (page 125)
the study of how individuals make choices about how they allocate and distribute scarce resources and how they interact with each other
What is Economics? (page 9)
the term 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? (page 8)
the negative relationship between a good's price and the quantity demanded
What is Law of Demand? (page 13)
includes all of the goods and services purchased by federal, state and local governments
What are Government Purchases? (page 76)
Economists use this model to study the demand for health
What is the Grossman Model? (page 120)
a point at which all the forces at work in a system are balanced by other forces, resulting in a stable and unchanging situation
What is Equilibrium? (page 18)
this type of cost is not necessarily the same as the monetary price you pay
What is Opportunity Cost? (page 7)
the positive relationship between price and quantity supplied
What is Law of Supply? (page 15)
items that are long-lived goods that are themselves produced and are used to produce other goods and services, but are not used up in production
What are Capital Goods? (page 74)
a drug approved by the FDA that is shown to be nearly chemically identical to an existing branded drug
What is a Generic Drug? (page 132)
the percentage change in quantity demanded or supplied as a result of a one percent change in price
What is Elasticity? (page 25)
the average amount of different items a supermarket carries
What is 47,000? (page 6)
What is Deadweight Loss? (page 36)
If a person did not work during the past week and did not actively seek work during the previous four weeks
What is Out of the Labor Force? (page 81)
a multi-billion-dollar industry that relies on scientific and technological advancements to uncover knowledge about both disease and the human body's response
What is Pharmaceutical Market? (page 131)
the occurs when the actions of one person affect the well-being of someone else, but neither party pays nor is paid for these effects
What is Externality? (page 51)
this is an important first step in maximizing overall well-being
What is Efficiency? (page 9)
the practice of elected officials trading votes
What is Logrolling? (page 61)
a third party who acts as a link between two others
What is an Intermediary? (page 88)
the tendency for insurance against loss to reduce incentives to prevent or minimize that loss
What is Moral Hazard? (page 137)
a period between a trough and a peak in economic activity
What is Expansion? (page 68)