Econ 102 Midterm 1

surplus

quantity supplied exceeds the quantity demanded market price is above equilibrium firms have unsold goods piling up

net worth

subtracting the value of a firm's liabilities from the value of its assets equals...

disadvantage for corporations

costly to organize

has a lower opportunity cost in the production of that good

if a country has a comparative advantage in the production of a good, then that country...

an inferior good

if an increase in income leads to a decrease in the demand for salami, then salami is...

perfectly competitive market

many buyers and sellers, all firms selling identical product, and no barriers for new firms entering the market

quantity demanded equals quantity supplied

at market equilibrium...

consumption, investment, government purchases, and net exports

four major categories of expenditure

advantage for corporations

greater ability to raise funds

entrepreneur

operate businesses that produce goods and services and bring together factors of production

disposable personal income

personal income minus personal tax payments

gross domestic product (GDP)

the market value of all final goods and services produced in a country during a period of time

corporations

there is a legal distinction b/w personal assets of the owners of the firm and the assets of the firm

law of supply

there is a positive relationship between price and quantity supplied and as the price of a product increase, firms will supply more of it to the market

normative economic statement

tobacco products should be banned in all public places

firms and households

two main categories of participants in markets

shows how households and firms are linked through product and factor markets

what is the circular flow diagram?

productive efficiency

when goods and services are at the lowest possible cost

purchases by federal, state, and local government

which levels of government spending are included in government spending?

households

which participants are of greatest importance in determining what goods and services are produced?

a discovery of a more efficient production process

would shift a nations production possibilities frontier outward