Key Terms
When buyers and sellers freely choose to trade without force or fraud.
What is Voluntary Exchange?
The formula used to calculate Consumer Surplus.
What is Buyer's Maximum Price minus Price?
You buy a brand-new pair of shoes at a local store.
What is YES (it counts towards GDP)?
A teenager buys a $900 laptop for school.
What is Consumer Spending?
Country A (GDP: $1,000,000 | Pop: 100)
vs.
Country B (GDP: $500,000 | Pop: 10)
The GDP Per Capita of Country A.
What is $10,000?
Having an excess of a resource, product, or money above what is actually needed.
What is a Surplus?
The formula used to calculate Producer Surplus.
What is Price minus Seller's Minimum Price?
You mow your own lawn on Saturday morning.
What is NO (non-market transaction)?
A local restaurant purchases a new industrial oven.
What is Business Spending?
Country A (GDP: $1,000,000 | Pop: 100)
vs.
Country B (GDP: $500,000 | Pop: 10)
The GDP Per Capita of Country B.
What is $50,000?
The total value of all final goods and services produced in a country in one year.
What is Gross Domestic Product (GDP)?
Alex has a $600 budget for a drone. The store's minimum price is $350, and they settle on a sale price of $450.
The Consumer Surplus for Alex's drone purchase.
What is $150? ($600 - $450)
You pay a landscaping company $50 to mow your lawn.
What is YES (it counts towards GDP)?
The local government purchases new police vehicles.
What is Government Spending?
Country A (GDP: $1,000,000 | Pop: 100)
vs.
Country B (GDP: $500,000 | Pop: 10)
The country with the larger overall economy by total output.
What is Country A?
The difference between what a consumer is willing to pay and what they actually pay.
What is Consumer Surplus?
Alex has a $600 budget for a drone. The store's minimum price is $350, and they settle on a sale price of $450.
The Producer Surplus for the retail store selling the drone.
What is $100? ($450 - $350)
A factory purchases steel to manufacture a new car.
What is NO (intermediate good)?
The U.S. exports $10 million worth of wheat to another nation.
What are Exports?
Country A (GDP: $1,000,000 | Pop: 100)
vs.
Country B (GDP: $500,000 | Pop: 10)
The country that produces more output per person on average.
What is Country B?
How much economic output a country produces per person.
What is GDP Per Capita?
Alex has a $600 budget for a drone. The store's minimum price is $350, and they settle on a sale price of $450.
The total combined economic surplus generated by this drone trade.
What is $250? ($150 + $100)
You purchase the finished car from the dealership.
What is YES (final good)?
The U.S. imports $20 million worth of foreign electronics.
What are Imports?
The metric from this section that provides a better measure of an individual standard of living. (Puts countries on an even playing field)
What is GDP Per Capita?