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36 terms

Econ Study Guide

NOTE: these are not all the things we have to know for Econ, but they are the words that I needed to study a lot :) but I got tired after chapter eight. So if anyone wants to add the rest of the terms, it would be wonderful! Happy Homework :D
STUDY
PLAY
Scarcity
the fact that limited amounts of goods and services are available to meet unlimited wants
Economics
the study of how people seek to satisfy their needs and wants by making choices (in a world of scarcity)
Shortage
When consumers want more of a good or service than producers are willing to make abailable at a particular price.
Entrepreneurs
People who decide how to combine resources to create new goods and services
Incentive
a positive motivational influence
Disincentive
a negative motivational influence
Marginal (thinking at the margin)
The process of deciding whether to do or use one additional unit of some resource
Microeconomics
the study of economic behavior and decision making in small units, such as households and firm
Macroeconomics
the study of economic behavior and decisions in a nation's whole economy
Free Market Economy
an economic system in which decisions on the three key economic uestions are based on voluntary exchange in markets
Mixed Economy
a market-based economic system in which the government is involved to some extent
Traditional Economy
an economic system that rellies on habit, custom, or ritual to decide the three key economics questions
Centrally Planned Economy
An economic system in which the government makes all decision on the three key economic questions
Pillars of Free Enterprise
private property, specialization, voluntary exchange, the price system, market competition, entrepreneurship
Demand
The desire to own something and the ability to pay for it
Law of Demand
Consumers will buy more of a good when its price is lower and less when its price is higher
Change in Quantity Demanded
movement along the demand curve
Change in demand
Shift of the demand curve
Market Demand
the demand by all the consumers of a given good or service
Individual Demand
how many 1 items person will buy at different prices.
Future Price Expectation, Income, Population, Price of other goods (substitutes and compliments), taste and preferences
What are the factors that shift the demand curve? (answer is in alphabetical order)
Elastic
Describes demand that is very sensitive to a change in price
Inelastic
Describes demand that is not very sensitive to a change in price
Supply
The amount of goods available
Law of supply
Producers offer more of a good as its price increases and less as its price falls
Changes in Quantity Supplied
movement along the supply curve
Changes in Supply
A shift in the supply curve
Cost of inputs, government, number of suppliers, price expectations, and technology
What are the factors that shift the supply curve? (answer is in alphabetical order)
Total Revenue
the total amount of money a firm receives by selling goods or services
Profit
the total revenue minus the total cost
Economics of scale
factors that cause a producers average cost per unit to fall as output rises
Market
Any arrangement that allows buyers and sellers to exchange things
Market Clearing Price/ equalibrium
the price at which the amount supplied is equal to the amount demanded
Productivity of Labor
the quantity of output produced by a unit of labor
Productivity
the ratio of the quantity and quality of units produced to the labor per unit of time
GDP
the total market value of all final goods and services produced annually in an economy