ch5 test
Mutually agreeable
Economic transactions willingly undertaken by both the buyer and the seller because each feels that the transaction will make him or her better off
Competition
The presence in a market of independent buyers and sellers who compete with one another and who are free to enter and exit the market as they each see fit
Private property
The right of private persons and firms to obtain, control, employ, dispose of, and bequeath land, capital, and other property
A woman who wants to start a flower shop finds she cannot do so unless the central government has already decided to allow a flower shop in her area
command system
circular flow model- bottom right corner (blue line)
consumption expenditures
circular flow model- Top left corner (blue line)
cost
why is private property important in the market system
it gives individuals the exclusive right to use their resources as they see fit
why does the use of money contribute to economic efficiency
it promote specification by overcoming the problem with bartering
circular flow model- top right corner (red line)
labor, land, capital, entrepreneurial ability
What are the 4 factors of production?
land, labor, capital, and entrepreneurial ability
macro or micro : the unemployment rate in the us was 5.1 percent in September of 2015
macro
A person should consume more of something when its ___________ __________ exceeds it's ______________ ___________
marginal benefits marginal lost
Shops stock and sell the goods customers want but the government levies a sales tax on each transaction to fund elementary schools, public libraries, and welfare programs
market system
what is the circular flow model
1- rent, wages, interest projects 2- land, labor 3- goods and services 4- revenue and consumption
what are the two characteristics that make economic systems differ
1. degree of decentralized use of market 2. degree of centralized government control
What is a budget line
A line that shows the different combinations of two products a consumer can purchase with a specific money income, given the products' prices.
What is economics defined as?
A social science concerned with making optimal choices under conditions of scarcity
What is a positive statement?
A statement that includes statistics and can be backed by statics. Ex-
Utility
Ability or capacity of a good or service to be useful and give satisfaction to someone.
The only taxes levied by the government are to pay for national defense, law enforcement, and a legal system designed to enforce contracts between private citizens
Laissez-faire system
macro or micro : U.S. output adjusted for inflation, increased by 2-4 percent in 2014.
Macro
What is macroeconomics concerned with?
Macroeconomics is the part of economics concerned with the economy as a whole and decision making by large units.
where is the optimal output on a graph
Mc=Mb
What is microeconomics concerned with?
Micro economics deals with specific things inside economics
In economic terms what does "utility" mean
Pleasure or satisfaction
what does consumer sovereignty mean?
Producers produce what households want to consume.
Economists content that most economic decisions are_______________.
Purposeful
Opprotunity Cost
The cost of the next best use of your time or money when you choose to do one thing over another
Freedom of enterprise
The freedom of firms to obtain economic resources, decide what products to produce with those resources, and sell those products in markets of their choice
Freedom of choice
The freedom of resource owners to dispose of their resources as they think best; of workers to enter any line of work for which they are qualified; and of consumers to spend their incomes in whatever way they feel is most appropriate
Self-interest
What each individual or firm believes is best for itself and seeks to obtain
what are the five fundamental questions
What will be produced? How will goods and services be produced? Who will get the output? How will the system accommodate change? How will the system promote progress?
What is creative destruction?
When new products and production methods destroy the market position or firms that are not willing to adjust.
What is a normative statement?
a statement that includes a value judgement and cannot be refuted just by looking at the evidence Ex-
marginal analysis
analysis that involves comparing marginal benefits and marginal costs
what does the law of increasing opportunity state
as more of a particular good is produced it's marginal opportunity cost increases
circular flow model- bottom left corner (red line)
goods and services
circular flow model- bottom right corner (red line)
goods and services
macro or micro : A U.S. software firm discharged 15 workers last month and transfers workers to India
micro
macro or micro : An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise
micro
macro or micro : Last week, Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point.
micro
circular flow model- Top right corner (blue line)
money income ( wages, rents, interests, profits)
why is money not an economic resource.
money is used to buy resources, money itself doesn't produce anything
circular flow model- Top left corner (red line)
resources
circular flow model- bottom left corner (blue line)
revenue
What does a production possibilities curve show?
the maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time l these curves show what the opportunity cost will be if a particular action is taken.
Economics
the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity
broadly defined what does competition involve
there are independently acting buyers and sellers in each market
