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Universities » Southern Illinois University (SI.. » ECON - Economics » 240 - Intro To Microeconomics » Flash Cards

FIRST TEST - Flashcards

Flashcard Deck Information

Class:	ECON 240 - Intro To Microeconomics
Subject:	Economics
University:	Southern Illinois University Carbondale
Term:	Spring 2011

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CORRECT

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Scarcity

Condition that arises because available resources are insufficient to satisfy wants.

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Incentives

Stick - Negative
Carrot - Positive

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Economics

Social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices.

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Macro

The study of the total effects on the national economy and the global economy of the choices that individuals, businesses, and governments.

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Micro

The study of the choices that individuals and businesses make, the way these choices interact, and influence that gov't exert on these choices.

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How

How Goods and Services are produced

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What

What goods and services get produced and in what quantities.

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For Whom

whom are the various goods and services produced? Depends on income and prices.

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Factors of Production

Productive resources to produce Goods and Services

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Land

Rent - use of land - All gifts of nature that we use to produce goods and services

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Labor

Wages (paid to labor). Work time/ effort devoted to producing goods and services. Quality depends on skill.

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Capital

Interest (Use of Capital). Tools, instruments, machines, buildings, and other items that have been produced in the past. Businesses now use to produce goods and services.

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Entrepreneurship

Profit (Entrepreneurs) Human resource that organizes business, production, and other resources.
Come up w/ new ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.

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Circular Flows

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Markets

Any arrangement that brings buyers and sellers together and enables them to get info and do business w/ each other.

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Factor Markets

Factors of production are bought and sold. Ex: Buildings, technologies, for business

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Goods Markets

Goods and Services are bought and sold. Ex: Farmers Market

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Federal Gov'ts

Major Expenditures:
Goods and Services
Social Security and Welfare benefits
Transfers to state and local gov'ts.

Main Taxes:
Personal Income
Corporate
Social Security

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State and Local

Major Expenditures
Goods and Services
Welfare Benefits

Main taxes
Sales Taxes
Property Taxes
State Income Taxes

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Real Flows

In-Factor Markets
Household supply factors of production
Firms hire factors of production

In-Good Markets
Firms supply goods and and services produced
Households buy goods and service

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Money Flows

Firms pay households incomes for the services of factors of production

Households pay firms for the goods and services they buy

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PPF

Illustrates effects of scarcity and its consequences

Shows maximum combination of goods and services that can be produced

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PPF notes

On PPF attainable - movement along the PPF is a trade off
Inside PPF - attainable but not efficient - movement off the PPF to inside (or inside the PPF) is free lunch
Outside PPF - Not attainable.

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Opportunity Cost

Op cost Per Unit - decrease/increase

Op cost of Action - decrease

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Economic Growth

The sustained expansion of production possibilities. Our economy grows when we develop better technologies for producing goods and services. improve the quality of labor, and get more machines to help us produce.

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Comparative Advantage

Is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else

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Absolute Advantage

is the situation in which one person is more productive than another person in several different areas

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Specialization and Trade

Reduce the amount of opportunity cost and increases total amount of production.

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Competitive Market

A market with so many buyers and sellers that no individual can influence price.

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Quantity Demanded

The amount of a good or service or resource that people are willing and able to buy during a specified period at a specified price.

Amount per unit of time

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Quantity Supplied

The amount of a good, service, or resource that people are willing and able to sell during a specified period at a specified price.

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Law of Demand

If the price of a good rises, the quantity demanded of that good falls

If the price of a good falls, the quantity demanded of that good rises

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Law of Supply

If the price of a good rises, the quantity supplied of that good rises.
If the price of a good falls, the quantity supplied of that good falls.

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Demand

The relationship between the quantity and price of a good when all other influences on buying plans remain the same.

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Supply

The relationship between quantity supplied and the price of the good when all other influences on selling plans remain the same.

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Demand Schedule

A list of the quantities demanded at each different price when all the other influences on buying plans remain the same.

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Supply Schedule

A list of the quantities supplied at each different price when all other influences on selling plans remain the same.

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Market Demand

The sum of the individual buyers demands.

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Market Supply

The sum of all the supplies of the sellers in a market.

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Market Equilibrium

When the quantity demanded equals the quantity supplied - when buyers' and sellers' plans are consistent

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Equilibrium Price

The price at which the quantity demanded equals the quantity supplied

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Equilibrium Quantity

The quantity bought and sold at the quilibrium price

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Surplus

More supply than demand

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Shortage

More demand than supply

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Law of Market Force

When there is a shortage, the price rises
When there is a supply, the price falls

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Scarcity	Condition that arises because available resources are insufficient to satisfy wants.
Incentives	Stick - Negative Carrot - Positive
Economics	Social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices.
Macro	The study of the total effects on the national economy and the global economy of the choices that individuals, businesses, and governments.

Generated by

Koofers.com

Micro	The study of the choices that individuals and businesses make, the way these choices interact, and influence that gov't exert on these choices.
How	How Goods and Services are produced
What	What goods and services get produced and in what quantities.
For Whom	whom are the various goods and services produced? Depends on income and prices.

Generated by

Koofers.com

Factors of Production	Productive resources to produce Goods and Services
Land	Rent - use of land - All gifts of nature that we use to produce goods and services
Labor	Wages (paid to labor). Work time/ effort devoted to producing goods and services. Quality depends on skill.
Capital	Interest (Use of Capital). Tools, instruments, machines, buildings, and other items that have been produced in the past. Businesses now use to produce goods and services.

Generated by

Koofers.com

Entrepreneurship	Profit (Entrepreneurs) Human resource that organizes business, production, and other resources. Come up w/ new ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.
Circular Flows
Markets	Any arrangement that brings buyers and sellers together and enables them to get info and do business w/ each other.
Factor Markets	Factors of production are bought and sold. Ex: Buildings, technologies, for business

Generated by

Koofers.com

Goods Markets	Goods and Services are bought and sold. Ex: Farmers Market
Federal Gov'ts	Major Expenditures: Goods and Services Social Security and Welfare benefits Transfers to state and local gov'ts. Main Taxes: Personal Income Corporate Social Security
State and Local	Major Expenditures Goods and Services Welfare Benefits Main taxes Sales Taxes Property Taxes State Income Taxes
Real Flows	In-Factor Markets Household supply factors of production Firms hire factors of production In-Good Markets Firms supply goods and and services produced Households buy goods and service

Generated by

Koofers.com

Money Flows	Firms pay households incomes for the services of factors of production Households pay firms for the goods and services they buy
PPF	Illustrates effects of scarcity and its consequences Shows maximum combination of goods and services that can be produced
PPF notes	On PPF attainable - movement along the PPF is a trade off Inside PPF - attainable but not efficient - movement off the PPF to inside (or inside the PPF) is free lunch Outside PPF - Not attainable.
Opportunity Cost	Op cost Per Unit - decrease/increase Op cost of Action - decrease

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Economic Growth	The sustained expansion of production possibilities. Our economy grows when we develop better technologies for producing goods and services. improve the quality of labor, and get more machines to help us produce.
Comparative Advantage	Is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else
Absolute Advantage	is the situation in which one person is more productive than another person in several different areas
Specialization and Trade	Reduce the amount of opportunity cost and increases total amount of production.

Generated by

Koofers.com

Competitive Market	A market with so many buyers and sellers that no individual can influence price.
Quantity Demanded	The amount of a good or service or resource that people are willing and able to buy during a specified period at a specified price. Amount per unit of time
Quantity Supplied	The amount of a good, service, or resource that people are willing and able to sell during a specified period at a specified price.
Law of Demand	If the price of a good rises, the quantity demanded of that good falls If the price of a good falls, the quantity demanded of that good rises

Generated by

Koofers.com

Law of Supply	If the price of a good rises, the quantity supplied of that good rises. If the price of a good falls, the quantity supplied of that good falls.
Demand	The relationship between the quantity and price of a good when all other influences on buying plans remain the same.
Supply	The relationship between quantity supplied and the price of the good when all other influences on selling plans remain the same.
Demand Schedule	A list of the quantities demanded at each different price when all the other influences on buying plans remain the same.

Generated by

Koofers.com

Supply Schedule	A list of the quantities supplied at each different price when all other influences on selling plans remain the same.
Market Demand	The sum of the individual buyers demands.
Market Supply	The sum of all the supplies of the sellers in a market.
Market Equilibrium	When the quantity demanded equals the quantity supplied - when buyers' and sellers' plans are consistent

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Koofers.com

Equilibrium Price	The price at which the quantity demanded equals the quantity supplied
Equilibrium Quantity	The quantity bought and sold at the quilibrium price
Surplus	More supply than demand
Shortage	More demand than supply

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Law of Market Force

When there is a shortage, the price rises When there is a supply, the price falls

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Koofers.com

List View: Terms & Definitions

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	Front	Back
	Scarcity	Condition that arises because available resources are insufficient to satisfy wants.
	Incentives	Stick - Negative Carrot - Positive
	Economics	Social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices.
	Macro	The study of the total effects on the national economy and the global economy of the choices that individuals, businesses, and governments.
	Micro	The study of the choices that individuals and businesses make, the way these choices interact, and influence that gov't exert on these choices.
	How	How Goods and Services are produced
	What	What goods and services get produced and in what quantities.
	For Whom	whom are the various goods and services produced? Depends on income and prices.
	Factors of Production	Productive resources to produce Goods and Services
	Land	Rent - use of land - All gifts of nature that we use to produce goods and services
	Labor	Wages (paid to labor). Work time/ effort devoted to producing goods and services. Quality depends on skill.
	Capital	Interest (Use of Capital). Tools, instruments, machines, buildings, and other items that have been produced in the past. Businesses now use to produce goods and services.
	Entrepreneurship	Profit (Entrepreneurs) Human resource that organizes business, production, and other resources. Come up w/ new ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.
	Circular Flows
	Markets	Any arrangement that brings buyers and sellers together and enables them to get info and do business w/ each other.
	Factor Markets	Factors of production are bought and sold. Ex: Buildings, technologies, for business
	Goods Markets	Goods and Services are bought and sold. Ex: Farmers Market
	Federal Gov'ts	Major Expenditures: Goods and Services Social Security and Welfare benefits Transfers to state and local gov'ts. Main Taxes: Personal Income Corporate Social Security
	State and Local	Major Expenditures Goods and Services Welfare Benefits Main taxes Sales Taxes Property Taxes State Income Taxes
	Real Flows	In-Factor Markets Household supply factors of production Firms hire factors of production In-Good Markets Firms supply goods and and services produced Households buy goods and service
	Money Flows	Firms pay households incomes for the services of factors of production Households pay firms for the goods and services they buy
	PPF	Illustrates effects of scarcity and its consequences Shows maximum combination of goods and services that can be produced
	PPF notes	On PPF attainable - movement along the PPF is a trade off Inside PPF - attainable but not efficient - movement off the PPF to inside (or inside the PPF) is free lunch Outside PPF - Not attainable.
	Opportunity Cost	Op cost Per Unit - decrease/increase Op cost of Action - decrease
	Economic Growth	The sustained expansion of production possibilities. Our economy grows when we develop better technologies for producing goods and services. improve the quality of labor, and get more machines to help us produce.
	Comparative Advantage	Is the ability of a person to perform an activity or produce a good or service at a lower opportunity cost than someone else
	Absolute Advantage	is the situation in which one person is more productive than another person in several different areas
	Specialization and Trade	Reduce the amount of opportunity cost and increases total amount of production.
	Competitive Market	A market with so many buyers and sellers that no individual can influence price.
	Quantity Demanded	The amount of a good or service or resource that people are willing and able to buy during a specified period at a specified price. Amount per unit of time
	Quantity Supplied	The amount of a good, service, or resource that people are willing and able to sell during a specified period at a specified price.
	Law of Demand	If the price of a good rises, the quantity demanded of that good falls If the price of a good falls, the quantity demanded of that good rises
	Law of Supply	If the price of a good rises, the quantity supplied of that good rises. If the price of a good falls, the quantity supplied of that good falls.
	Demand	The relationship between the quantity and price of a good when all other influences on buying plans remain the same.
	Supply	The relationship between quantity supplied and the price of the good when all other influences on selling plans remain the same.
	Demand Schedule	A list of the quantities demanded at each different price when all the other influences on buying plans remain the same.
	Supply Schedule	A list of the quantities supplied at each different price when all other influences on selling plans remain the same.
	Market Demand	The sum of the individual buyers demands.
	Market Supply	The sum of all the supplies of the sellers in a market.
	Market Equilibrium	When the quantity demanded equals the quantity supplied - when buyers' and sellers' plans are consistent
	Equilibrium Price	The price at which the quantity demanded equals the quantity supplied
	Equilibrium Quantity	The quantity bought and sold at the quilibrium price
	Surplus	More supply than demand
	Shortage	More demand than supply
	Law of Market Force	When there is a shortage, the price rises When there is a supply, the price falls

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