Econ Quiz 1
by Ambesnoff
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Scarcity
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
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108 cards
| 1 | Scarcity |
A situation in which unlimited wants exceed the limited resources available to fulfill those wants |
| 2 | Production Possibilities Frontier (PPF) |
a curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology |
| 3 | Opportunity Cost |
The highest-valued alternative that must be given up to engage in an activity. |
| 4 | Economic Growth |
the ability of the economy to increase the production of goods and services |
| 5 | Trade |
the act of buying and selling |
| 6 | Absolute Advantage |
the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources |
| 7 | Comparative Advantage |
the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors |
| 8 | Market |
a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade |
| 9 | Product Market |
a market for goods - such as computers - or services - such as medical treatment |
| 10 | Factor Market |
a market for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability |
| 11 | Factors of Production |
labor, capital, natural resources, and other inputs used to make goods and services |
| 12 | circular flow diagram |
a model that illustrates how participants in markets are linked |
| 13 | Free Market |
a market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed |
| 14 | Entrepreneur |
someone who operates a business, bringing together the factors of production - labor, capital, and natural resources - to produce goods and services |
| 15 | property rights |
the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it |
| 16 | Adverse selection |
The situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. |
| 17 | Affordable Care Act (ACA) |
Health care reform legislation passed by Congress and signed by President Barack Obama in 2010. The government regulates the health insurance policies that private insurance companies offer. |
| 18 | Asymmetric information |
A situation in which one party to an economic transaction has less information than the other party. |
| 19 | Fee-for-service |
A system under which doctors and hospitals receive a payment for each service they provide. |
| 20 | Health care |
Goods and services, such as prescription drugs, consultations with doctors, and surgeries, that are intended to maintain or improve a person's health. |
| 21 | Health insurance |
A contract under which a buyer agrees to make payments, or premiums, in exchange for the provider's agreeing to pay some or all of the buyer's medical bills. |
| 22 | Market-based reforms |
Changes in the market for health care that would make it more like the markets for other goods and services. |
| 23 | Moral hazard |
Actions people take after they have entered into a transaction that make the other party to the transaction worse off. |
| 24 | Principal-agent problem |
A problem caused by an agent pursuing the agent's own interests rather than the interests of the principal who hired the agent. |
| 25 | Single-payer health care system |
A system, such as the one in Canada, in which the government provides health insurance to all of the country's residents. |
| 26 | Socialized medicine |
A health care system under which the government owns most of the hospitals and employs most of the doctors. |
| 27 | Elasticity |
A measure of how much one economic variable responds to changes in another economic variable. |
| 28 | Price elasticity of demand |
The responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price. |
| 29 | Elastic Demand |
the case where the percentage change in quantity demanded is GREATER than the percentage change in price so the price elasticity is greater than one in absolute value |
| 30 | Inelastic Demand |
the case where the percentage change in quantity demanded is less than the percentage change in price so the elasticity is less than one in absolute value |
| 31 | Unit-elastic demand |
the case where the percentage change in quantity demanded is equal to the percentage change in price so the price elasticity is equal to one in absolute value |
| 32 | perfectly inelastic demand |
the case where the quantity demanded is completely unresponsive to price and the price elasticity of demand equals zero |
| 33 | perfectly elastic demand |
the case where the quantity demanded is infinitely responsive to price and the price elasticity of demand equals infinity |
| 34 | total revenue |
the total amount of funds a seller receives from selling a good or service, calculated by multiplying price per unit by the number of units sold |
| 35 | cross price elasticity of demand |
the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good |
| 36 | income elasticity of demand |
a measure of the responsiveness of the quantity demanded to changes in income, measured by the percentage change in the quantity demanded divided by the percentage change in income |
| 37 | price elasticity of supply |
the responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in the quantity supplied of a product by the percentage change in the product's price |
| 38 | Externality |
A benefit or cost that affects someone who is not directly involved in production or consuming a good or service |
| 39 | Private Cost |
The cost borne by the producer of a good or service. Just the regular cost of producing a regular good |
| 40 | Social Cost |
The total cost of producing a good or service including both the private cost and external cost |
| 41 | Private Benefit |
The benefit received by the consumer of a good or service |
| 42 | Social Benefit |
The total benefit from consuming a good or service including the private benefit and external benefit |
| 43 | Market Failure |
A situation in which the market fails to be efficient |
| 44 | Property Rights |
The rights individuals have to the exclusive use of their property |
| 45 | Transaction Cost |
The cost in time and other resources that parties incur in the process in agreeing to and carrying out an exchange of good or services |
| 46 | Coase Theorem |
If transactions costs are low, private bargaining will result in an efficient solution to the problem of externalizes |
| 47 | Pigovian Taxes & Subsidies |
Government taxes and subsidies intended to bring out an efficient level of output in the presence of externalities |
| 48 | Command & Control Approach |
A policy that involves the government imposing quantitive limits on the amount of pollution firms are allowed to emit or requiring firms to install specific pollution control devices |
| 49 | Rivalry |
A situation that occurs when one persons consumption of a unit of a good means no one else can consume that unit |
| 50 | Excludability |
The situation in which anyone who does not pay for a good can not consume it |
| 51 | Private Good |
A good that is both rival and excludable |
| 52 | Public Good |
A good that is both nontrivial and non excluded |
| 53 | Free-Riding |
Benefit of a good without paying for it |
| 54 | Common Resource |
A good that is rival but not excludable. Ex: Cutting down a tree in a forest that has no property rights |
| 55 | Tragedy of the Commons |
The tendency for a common resource to be overused |
| 56 | Price Ceiling |
a legally determined maximum price that sellers may charge |
| 57 | Price Floor |
a legally determined minimum price that sellers may receive |
| 58 | consumer surplus |
the difference between the highest price a consumer is willing to pay for a good or service and the actual price the consumer pays |
| 59 | marginal benefit |
the additional benefit to a consumer from consuming one more unit of a good or service |
| 60 | marginal cost |
the additional cost to a firm of producing one more unit of a good or service |
| 61 | producer surplus |
the difference between the lowest price a firm would be willing to accept for a good or service and the price it actually receives |
| 62 | economic surplus |
the sum of consumer surplus and producer surplus |
| 63 | deadweight loss |
the reduction in economic surplus resulting from a market not being in competitive equilibrium |
| 64 | black market |
a market in which buying and selling take place at prices that violate government price regulations |
| 65 | tax incidence |
the actual division of the burden of a tax between buyers and sellers in a market |
| 66 | perfectly competitive market |
A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. |
| 67 | demand schedule |
a table that shows the relationship between the price of a product and the quantity of the product demanded |
| 68 | quantity demanded |
the amount of a good or service that a consumer is willing and able to purchase at a given price |
| 69 | demand curve |
a curve that shows the relationship between the price of a product and the quantity of the product demanded |
| 70 | market demand |
the demand by all the consumers of a given good or service |
| 71 | Law of Demand |
A rule that states that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease. |
| 72 | substitution effect |
the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods that are substitutes |
| 73 | income effect |
the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power |
| 74 | ceteris paribus translation |
"all else equal" |
| 75 | Ceteris Paribus Condition |
The requirement that when analyzing the relationship between two variables—such as price and quantity demanded—other variables must be held constant. |
| 76 | Normal Good |
a good for which the demand increases as income rises and decreases as income falls |
| 77 | inferior good |
a good for which the demand increases as income falls and decreases as income rises |
| 78 | substitutes |
Goods and services that can be used for the same purpose. |
| 79 | complements |
goods and services that are used together |
| 80 | demographics |
the characteristics of a population with respect to age, race, and gender. |
| 81 | quantity supplied |
the amount of a good or service that a firm is willing and able to supply at a given price |
| 82 | supply schedule |
a table that shows the relationship between the price of a good and the quantity of the product supplied |
| 83 | supply curve |
A curve that shows the relationship between the price of a product and the quantity of the product supplied. |
| 84 | Law of Supply |
a rule that states that, holding everything else constant, increases in price cause increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied |
| 85 | technological change |
a positive or negative change in the ability of a firm to produce a given level of output with a given quantity of inputs |
| 86 | market equilibrium |
a situation in which quantity demanded equals quantity supplied |
| 87 | competitive market equilibrium |
a market equilibrium with many buyers and sellers |
| 88 | surplus |
A situation in which quantity supplied is greater than quantity demanded |
| 89 | shortage |
A situation in which quantity demanded is greater than quantity supplied |
| 90 | Scarcity |
A situation in which unlimited wants exceed the limited resources available to fulfill those wants |
| 91 | Economics |
the study of the choices people make to attain their goals, given their scarce resources |
| 92 | Economic Model |
a simplified version of reality used to analyze real-world economic situations |
| 93 | Market |
a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade |
| 94 | Marginal Analysis |
analysis that involves comparing marginal benefits and marginal costs |
| 95 | Trade-off |
the idea that, because of scarcity, producing more of one good or service means producing less of another good or service |
| 96 | Opportunity cost |
The highest-valued alternative that must be given up to engage in an activity. |
| 97 | Centrally Planned Economy |
an economy in which the government decides how economic resources will be allocated |
| 98 | Market Economy |
an economy in which the decisions of households and firms interacting in markets allocate economic resources |
| 99 | Mixed Economy |
An economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. |
| 100 | productive efficiency |
a situation in which a good or service is produced at the lowest possible cost |
| 101 | allocative efficiency |
A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it |
| 102 | voluntary exchange |
a situation that occurs in markets when both the buyer and the seller of a product are made better off by the transaction |
| 103 | equity |
the fair distribution of economic benefits |
| 104 | economic variable |
something measurable that can have different values, such as the number of people employed in manufacturing |
| 105 | positive analysis |
analysis concerned with what is |
| 106 | normative analysis |
analysis concerned with what ought to be |
| 107 | Microeconomics |
The study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices. |
| 108 | Macroeconomics |
the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth |