UNIT #1
This is the inherently limited nature of society’s resources, given society’s unlimited wants and needs.
What is scarcity?
This is an exogenous factor that would shift the demand curve.
What is...
income
price of related goods
number of buyers
tastes and preferences
This is the difference between willingness to pay for a good and the price actually paid to get the good.
What is consumer surplus?
This occurs when the costs or benefits of a market activity affect a third party.
What is an externality?
This is the equation for Total Profit.
Total Profit = Total Revenue - Total Cost
This is the situation in which an individual, business, or country can produce something at a lower opportunity cost than a competitor.
What is comparative advantage?
This is the change in the supply and demand model as a result of an increase in the costs of production.
What is a supply curve shift to the left?
This is the decrease in economic activity caused by market distortions, such as a tax, represented by the area of a triangle in the supply and demand model.
What is deadweight loss?
Economists differentiate private and public goods based on these two characteristics.
What are rival/non-rival and excludable/non-excludable?
This is the difference between accounting profit and economic profit.
What are opportunity costs?
This model illustrates the combinations of outputs a society can produce if all of its resources are being used efficiently.
What is the Production Possibilities Frontier?
The market price of any good will adjust to bring the quantity supplied and quantity demanded into balance at this point.
What is equilibrium?
This is a legally established maximum price for a good or service.
What is a price ceiling?
These kind of goods are rival and non-excludable, such as open-access fisheries.
What are common property goods?
This model describes the relationship between inputs and output.
What is the production function?
Points located in this region of the PPF model represent production output that is possible, but not efficient.
What is "under the PPF"?
This occurs when QD > QS, at any price below equilibrium. As a result, price will rise over time toward equilibrium.
What is a shortage?
This is the outcome in the supply and demand model as the result of a binding price floor.
What is a surplus?
Unfortunately, this occurs when a rival (but nonexcludable) good becomes depleted or ruined.
What is the Tragedy of the Commons?
This occurs when the use of additional inputs are associated with output rising at a decreasing rate.
What is diminishing marginal product?
It says, "All else equal, there is an inverse relationship between price and quantity demanded."
What is the Law of Demand?
This is a measure of the responsiveness of buyers and sellers to changes in price or income.
What is elasticity?
This is a natural result of rent control laws.
What is
less maintenance
lower quality
higher fees
housing discrimination
These are the four categories of Factors of Production.
What are
Labor
Land
Capital
Technology
Multiplying by this factor, converts marginal product from units of output to dollars.
What is the sales price?