Unit 1
Unlimited wants and limited resources
What is scarcity?
This law states that, all else being equal, as the price of a good increases, the quantity demanded decreases.
What is the law of demand?
When the coefficient is 1
What is Unit Elastic
A graph showing maximum combinations of two goods or services that can be produced with limited resources.
What is PPC?
4 Factors of production
What is L, L, C, E
The value of the next best alternative foregone when making a decision.
What is opportunity cost?
This is a movement along the Demand Curve
What is a change in quantity demanded
The Calculation for PED
What is the %Q/%P
The supply Curve is horizontally straight in this graph.
Perfeclty elastic graph
These are goods that are replaceable and ones that go together.
What are substitutes and compliments
The ability to produce a good at a lower opportunity cost than others
What is comparative advantage?
In a market where it brings supply and demand into balance.
What is
Eqiulibrium
How do you find the calculation for % change in Q/P?
What is
new-old/old
The supply curve in this graph is vertically straight.
Perfeclty inelastic graph
When a producer can provide a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than its competitors.
What is absolute advantage?
The point where an economy operates at maximum efficiency, producing goods and services without waste, is located on this curve.
What is the production possibilities curve (PPC)?
A fear that prices will go up in the future
What is an increase in Demand
The coefficient if the PED is relatively inelastic
What is less than 1
Point A represented inside the curve
Inefficient Point
This principle suggests that as you consume more of a good, the additional satisfaction decreases.
What is the law of diminishing marginal utility?
When a producer can provide a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than its competitors.
What is absolute advantage?
As the price of a good increases, the quantity supplied increases, and vice versa.
What is the law of supply?
The coefficient is infinity
What is perfectly elastic.
When both of these happen, either P or Q shifts, and either P or Q indeterminant.
Double Shift
Your ability to purchase a Ribeye steak is based on your income.
What is a normal good