The gain or pleasure that it brings
Tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services.
simplified representation of the real world that economists develop to describe how the economy behaves and is expected to perform in the future
the study of how people seek to satisfy their needs and wants by making choices
the ratio of output work to input work, often expressed as a percentage.
The ability to combine the factors of land, labor, and capital to create factory production
Factors of Production
Goods and services are produced by using productive resources such as Land, Labor, Capital, and Entrepreneurship.
Good and Services
All the objects that people value and produce to satisfy human wants
the knowledge and skills that workers acquire through education, training, and experience
a reason for doing something; something that stimulates action
excite the curiosity of
human effort directed toward producing goods and services
natural resources used to produce goods and services
the branch of economics that studies the overall working of a national economy
a border or edge; a limit in condition or ability; an amount or degree of difference
the additional benefit to a consumer from consuming one more unit of a good or service
The additional cost of producing one more unit of a good or service
the branch of economics that studies the economy of consumers or households or individual firms
whatever must be given up to obtain some item
the money a business receives for its products or services over and above its costs
Choosing the alternative that has the greatest value from among comparable-quality products.
a regular payment by a tenant to a landlord for use of some property
not having enough resources to satisfy every need
one's own personal gain
the choices that are best for society as a whole
an exchange of one benefit for another
money earned for doing work
the ability to produce a good using fewer inputs than another producer
term for resources being deployed to produce just the right amount of each product to satisfy society's wants
The growth of capital resources, including human capital
the ability to make something at a lower opportunity cost than other producers face
the ability of the economy to produce increasing quantities of goods and services
an organization that produces goods and services for sale
the additional satisfaction or benefit received when one more unit is produced. (the most ppl are willing to pay for an additional unit)
Marginal benefit curve
a curve that shows the relationship between the marginal benefit of a good and the quantity of that good consumed
the extra cost of adding one unit. (the opportunity cost of producing one more unit of it)
the world of commercial activity where goods and services are bought and sold.
Any commodity or token that is generally acceptable as a means of payment.
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
a situation in which goods and services are produced at the lowest possible cost
Production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology.
The rights of an individual to own, use, rent, invest in, buy, and sell property.
is a term that is used to describe the overall process of invention, innovation and diffusion of technology or processes
Change in demand
A change in the quantity demanded of a good or service at every price; a shift of the demand curve to the left or right
Change in supply
A change in the quantity supplied of a good or service at every price; a shift of the supply curve to the left or right.
Change in the quantity demanded
a movement along the demand curve that occurs in response to a change in price
Change in the quantity supplied
a movement along the supply curve that occurs in response to a change in price
A market in which there are many buyers and sellers of the same good or service, none of whom can influence the price at which the good or service is sold
either of two parts that mutually complete each other
the quantity of a good or service that consumers are willing and able to buy
a curve that shows the relationship between the price of a product and the quantity of the product demanded
the price at which the amount producers are willing to supply is equal to the amount consumers are willing to buy
the quantity supplied and the quantity demanded at the equilibrium price.
a good for which the demand increases as income falls and decreases as income rises
Law of demand
consumers buy more of a good when its price decreases and less when its price increases
Law of supply
the principle that suppliers will normally offer more for sale at higher prices and less at lower prices
The price that we observe today, expressed in today's dollars; also called the absolute or nominal price.
a good for which the demand increases as income rises and decreases as income falls
the amount of a good or service that a consumer is willing and able to purchase at a given price
the amount a supplier is willing and able to supply at a certain price
The price of a specific good or service in comparison to the prices of other goods and services.(a realtive price is an opportunity cost)
a person or thing that takes or can take the place of another
the amount of goods and services that producers are able and willing to sell at various prices during a specified time period
a curve that shows the relationship between the price of a product and the quantity of the product supplied.
Cross elasticity of demand
a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good.
The type of demand that exists when the percentage change in quantity demanded is greater than the percentage change in price.
Elasticity of supply
A measure of the responsiveness of quantity supplied to a price change; the percentage change in quantity supplied divided by the percentage change in price
Income elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in consumers' income, computed as the percentage change in quantity demanded divided by the percentage change in income
A situation in which an increase or a decrease in price will not significantly affect demand for the product.
Perfectly elastic demand
product or resource demand in which quantity demanded can be of any amount at a particular product price; graphs as a horizontal demand curve
Perfectly inelastic demand
Product or resource demand in which price can be of any amount at a particular quantity of the product or resource demanded; quantity demanded does not respond to a change in price; graphs as a vertical demand curve.
Price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price
the total amount of money a company receives by selling goods or services
Total revenue test
a test determine elasticity of demand between any two prices by noting what happens to the total revenue when price changes
Unit elastic demand
the price elasticity of demand is one, so the percentage change in quantity equals the percentage change in price
A tradeoff between efficiency and fairness that recognizes the cost of making income transfers.
An economic system in which the allocation of resources is heavily controlled by government instead of free market forces
The amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
the reduction in economic surplus resulting from a market not being in competitive equilibrium.
a situation in which a market left on its own fails to allocate resources efficiently.
the difference between the lowest price a firm would be willing to accept and the price it actually receives
people in similar situations should be treated similarly. This principle underlies the idea of equality of opportunity and the conclusion that fair rules lead to a fair outcome.
consumer surplus + producer surplus
The opportunity costs of making trades in a market. The costs that arise from finding someone with whom to do business, of reaching an agreement about the price and other aspects of the exchange, and of ensuring that the terms of the agreement are fulfilled.
the theory, proposed by Jeremy Bentham in the late 1700s, that government actions are useful only if they promote the greatest good for the greatest number of people