Produced goods that can be used as inputs for further production, such as factories, machinery, tools, computers and buildings
A Latin term meaning "all other things constant", or "nothing else changes"
Two goods that are used jointly in consumption.
The difference between the maximum price a buyer is willing and able to pay for a good or service and the price actually paid.
Decisions at the Margin
Decision making characterized by weighing the additional benefits of a change against the additional costs of a change with respect to current conditions.
The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period.
The numerical tabulation of the quantity demanded of a good at different prices.
A state of either surplus of shortage in a market.
The way in which society decides to answer key economic questions- in particular those questions that relate to production and trade.
The science of scarcity; the science of how individuals and societes deal with the fact that wants are greater than the limited resources available to satisfy those wants.
Exists when the marginal benefits equal marginal costs.
The percentage change in quantity demanded is greater than the percentage change in price. Quantity demanded changes proportionately more than price changes.
The particular talent that some people have for organizing the resources of land, labor and capitol to produce goods, seek new business opportunities, and develop new ways of doing things.
The price-quantity combination from which there is no tendancy for buyers or sellers to move away.
The price at which quantity demanded of the good equals quantity shipped.
The quantity at which the amount of the good that buyers are willing and able to buy equals the amount that sellers are willing and able to sell, and both equal the amount actually bought and sold.
The percentage change in quantity demanded is less than the percentage change in price. Quantity demanded changes proportionately less than price changes.
The physical and mental talents people contribute to the production process.
All natural resources, such as minerals, forests, water, and unimproved land.
Law of Demand
As the price of a good rises, the quantity demanded of the good falls, and as the price of a good falls, the quantity demanded of the good rises, Ceteris Paribus.
Law of Diminishing Marginal Utility
For a given time period, the marginal utility or satisfation gained by consuming equal successive units of a good will decline as the amount consumed increases, Ceteris Paribus.
Law of Increasing Opportunity Costs
As more of a good is produced, the opportunity costs of producing that good increases, Ceteris Paribus.
Law of Supply
As the price of a good rises, the quantity supplied of the good rises, and as the price of a good falls, the quantity supplied of the good falls, Ceteris Paribus.
The branch of economics that deals with human behavior and choices as they relate to highly aggregate markets or the entire economy.
Additional benefits. The benefits connected to consuming an additional unit of a good or undertaking one more unti of an activity.
The change in total cost from a change in output.
The branch of economics that deals with human behavior and choices as they relate to relatively small units - an individual, a firm, an industry, a single market.
An economic system characterized by largely private ownership of factors of production, market allocation of resources, and decentralized decision making.
The study of "what should be" in economic matters.
The most highly valued opportunity or alternative forfeited when a choice is made.
Perfectly Elastic Demand
A small percentage change in price causes an extremely large percentage change in quantity demanded.
Perfectly Inelastice Demand
Quantity demanded does not change as price goes up.
The study of "what is" in economic matters.
A government-mandated maximum price above which legal trades cannot be made.
Price Elasticity of Demand
A measure of the responsiveness of quantity demanded to changes in price.
A government-mandated minimum price below which legal trades cannot be made.
The difference between the price sellers receive for a good and the minimun or lowest price for which they would have sold the good.
Production Possibilities Frontier (PPF)
Represents the possible combinations of the two goods that can be produced in a certain period of time, under the conditions of a given state of technology and fully employed resources.
The situation that exists when a firm produces its output at the lowest possible per unit cost.
The condition where less than the maximum output is produced with given resources and technology. Implies that more of one good can be produced without any less of another good being produced.
Refers to the laws, regulations, rules, and social customs that define what an individual can and cannot do in society.
A means of deciding who get what of available resources and goods.
The condition in which our wants are greater than the limited resources available to satisfy those wants.
A condition in which quantity demanded is greater than quantity supplied. Shortages occur only at prices below equilibrium price.
Two goods that satisfy similar needs or desires.
The willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period.
The numerical tabulation of the quantity supplied of a good at different prices. A supply schedule is the numerical reoresentation of the law of supply.
A condition in which quantity supplied is greater than quantity demanded. Surpuses occur only att prices above equilibrium price.
Price times quantity sold.
The costs associated with the time and effort need to search out, negotiate, and consummate an exchange.
Unit Elastic Demand
The percentage change in quantity demanded is equal to the percentage change in price. Quantity demanded changes proportionately to price changes.
A measure of the satisfation, happiness, or benefit that results from the consumption of a good.