Economics Final Exam Defintion Quizlet

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Clayton Act

Prevents anticompetitive practices even earlier by targeting price discrimination, limit further mergers and acquisitions, and limit membership on boards of companies in particular situations

Sherman Act

Prohibits activities that restrict interstate commerce and competition in the marketplace; outlaws any contract, conspiracy, or combination of business interests in restraint of foreign or interstate trade

law of demand

Quantity purchased varies inversely with price (downward sloping)

law of supply

Quantity sold varies directly with price (upward sloping)

Scientific Method

Question, Research, Hypothesis, Experiment, Analysis, Conclusion, Communication

Labor supply

Refers to the number of hours a worker is willing and able to work in a given period for a given wage rate

Elasticity Determinants

1. Availability of substitutes 2. Luxury vs necessity 3. Proportion of income spent on the good 4. How much time has elapsed since the price change

Perfect competition assumptions

1. Many buyers and sellers 2. Free entry and exit 3. Identical goods 4. Knowledge of prices

Monopsony

A market situation in which there is only one buyer.

HHI

A measure of the size of firms in relation to the industry they are in; an indicator of the amount of competition among them

Tragedy of the Commons

A situation in which individuals with access to a public (or common) resource act in their own interest and, in doing so, ultimately deplete this resource.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because itknows the other party bears the economic consequences of their behavior.

Post Hoc Ergo Propter Hoc Fallacy

An assumption that one thing caused another merely because the first thing preceded the other.

elasticity

An economic measure of how sensitive one economic factor is to changes in another.

Positive and Negative Externalities

An indirect cost or benefit to an uninvolved third party.

Fallacy of Composition

An inference that something is true of the whole because it is true of part of the whole.

Adverse selection

An unequal distribution of benefits to buyers and sellers as a result of having different information; sellers have information that buyers do not have, or vice versa.

labor demand

Determines how many workers an employer is willing and able to hire at a given time and wage rate

Market for lemons

No buyer can accurately assess the value of a product through examination before a sale is made; sellers know more than buyers.

Monopoly

The exclusive possession or control of the supply of or trade in a commodity or service.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Short Run Supply Curve

The portion of a firm's Marginal Cost curve that lies above the Average Variable Cost curve.

Economics

The study of scarcity and its implications for the use of resources, production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society

elasticity relationship with total revenue

Total revenue is maximized at the price where elasticity of demand is equal to one (unit elastic).

Pareto Efficiency

When an economy has its resources and goods allocated to the maximum level of efficiency, and no change can be made without making someone worse off.

Remedies

a situation where one party seeks to recover damages from another party.

long run

all inputs become variable, considered anything beyond the short-run

short run

at least one input is fixed, not a defined period of time

Macroeconomics

concerned with the actions of governments and countries

Microeconomics

concerned with the actions of individuals and businesses

Positive statement

what "is"

Normative statement

what "ought to be"


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