FE Dogear
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Created by:
jack_mcshane on December 18, 2009
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24 terms
Terms | Definitions |
|---|---|
 Negative externality | An adverse side effect of an act that is felt by others |
| positive externality | A beneficial side effect of an act that is felt by others |
| law of diminishing marginal utility | A law stating that as a person consumes additional units of a good, the utility gained from each additional unit of the good decreases |
| law of demand | a law stating that as price of good increases, quantity demanded of good decreases and vice-versa |
| Normal Good | A good for which the demand rises as the income rises (luxuries, not necessities) |
| Inferior Good | A good for which the demand falls as income rises (crappy things i.e. hotdogs not steaks) |
| neutral good | Income does not effect the consumption of these goods (necessities) |
| Elasticity of Demand | The relationship between the percentage change in quantity demanded and percentage change in price |
| Elastic Demand | The type of demand that exists when the percentage change in quantity demanded is greater than the percentage change in price |
| Inelastic demand | the type of demand that exists when the percentage change in quantity is less than the percentage change in price |
| Unit-Elastic Demand | The type of demand that exists when the percentage change in quantity demanded is the same in percentage change of price |
| Law of Supply | A law stating that as the price of a good increases, the quantity supplied of a good increases and vice-versa |
| Elasticity of Supply | The relationship between the percentage change in quantity supplied and the percentage change in price |
| Elastic Supply | The type of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price |
| Inelastic Supply | The type of supply that exists when the percentage change in quantity supplied is less than the percentage change in price |
| Law of Diminishing Marginal Returns | A law that states if additional units of one resource are added to another resource in fixed supply, eventually the additional output will decrease (If we hire more workers, eventually the output from each worker will be less) |
| Perfectly Competitive Market | A market that: 1) Many buyers and sellers 2) All firms selling identical goods 3) All info on buying and selling available to buyers and sellers 4) easy entry and exit EX) wheat, corn, stocks |
| Monopolistic Market | A market that: 1) has a single seller 2) sale of product has no close substitues 3) extremely high barriers to entry EX) Last Gas station for 200 miles, water, electricity, first class mail |
| Monopolistic Competitive Market | A market that: 1) many buyers and sellers 2) The production and sale of slightly differentiated products 3) Easy entry and exit EX) Clothing, meals at Restaurants |
| Oligopolistic Market | A market that: 1) Has few sellers 2) Production of either identical or slightly differentiated 3) Significant Barriers to entry EX) Cars, cereal, airlines |
| aggregate demand curve | A curve that shows the quantity of goods and services that buyers are willing and able to buy at different price levels |
| aggregate supply curve | A curve that shows the quantity of goods and services that producers are willing and able to produce at different price levels |
| open market operations | Buying and selling of Government securities by the fed (Buying increases $ supply, selling decreases) |
| discount rate | The intrest rate the fed charges banks (If fed raises, $ supply decreases and vice-versa) |
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