Economics Exam 1

Goal of rent control

help the poor by making housing more affordable

Both buyers and sellers

A market includes

The y coordinate

second number of an ordered pair and represents the point's vertical location

Inferior Good

If a decrease in income increases the demand for a good, then the good is a(n)

Highly Competitive

Most markets in the economy are

Productivity

Refers to the quantity of goods and services produced from each unit of labor input

willingness to pay

Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called

Market Failure

refers to a situation in which the market on its own fails to allocate resources efficiently

Equality

refers to how evenly the benefits from using resources are distributed among members of society

Efficiency

refers to how much a society can produce with its resources

People face tradeoffs

The adage, "There is no such thing as a free lunch," means

Visual model of the economy

The circular-flow diagram is a

Externalities

The decisions of buyers and sellers that affect people who are not participants in the market create

price and quantity demanded

The demand curve for a good is a line that relates

Perfect Competition

The highest form of competition is called

Large positive number

The slope of a steep upward-sloping line will be a

Sellers

The supply of a good or service is determined by

Equilibrium

The unique point at which the supply and demand curves intersect is called

consumer surplus + producer surplus

Total surplus in a market is equal to

Rent control

______________ serves as an example of a price ceiling

A marginal change

small, incremental adjustment

Positive Analysis

studying how market forces produce equilibrium is an example of

The invisible hand

how the decisions of households and firms lead to desirable market outcomes

Production Possibilities Frontier

A certain cowboy spends 10 hours per day mending fences and herding cattle. For the cowboy, a graph that shows his various possible mixes of output (fences mended per day and cattle herded per day) is called his

Quantity Demanded

A demand curve shows the relationship between price and

Price and quantity demanded

A demand schedule is a table that shows the relationship between

ceiling

A legal maximum on the price at which a good can be sold is called a price

floor

A legal minimum on the price at which a good can be sold is called a price

Circular flow diagram

A model that shows how dollars flow through markets among households and firms is called the

Lower than his or her opportunity cost of that good

A person can benefit from specialization and trade by obtaining a good at a price that is

Demand Schedule

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a

payroll tax

A tax on the wages that firms pay their workers

Getting all it can get from the scarce resources it has available

An economic outcome is said to be efficient if the economy is

the minimum wage

An example of a price floor is

Department of Labor

Analysis of data on workers and those looking for work is conducted by economists at the

Competitive Market

Are so many buyers and so many sellers that each has a negligible impact on the price of the product

The Business Cycle

Both the production of goods and services and the unemployment rate are used to measure

inputs into the production process

Factors of production are

Imports

Goods produced abroad and sold domestically are called

Self Interest and Prices

In a market economy, economic activity is guided by

can be used to predict the impact on the economy of various events and policies

In a market economy, supply and demand are important because they

Capital

In economics ________ refers to, buildings and machines used in the production process

Output

In the circular-flow diagram, another name for goods and services produced by firms is

Households and firms

In the simple circular-flow diagram, the participants in the economy are

lowest price employers may pay for labor

Minimum-wage laws dictate the

Do so because they get something in return

People who provide you with goods and services

Market Economy

Supply and demand determine prices and prices, in turn, allocate the economy's scarce resources

payroll tax

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

allow them to do

The French expression laissez-faire is used by free-market advocates, which literally translates as

Congressional Budget office

The President DOES NOT receive economic policy advice from these economists

Externalities

The consumption of water by local residents that may include pesticide runoff from local farmers' fields is an example of

Market Economy

The decisions of firms and households are guided by prices and self-interest in a

Department of the Treasury

The design of tax policy is one of the responsibilities of economists who work at the

Social Security and Medicare

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

x coordinate

The first number in any ordered pair is

curve and it usually slopes downward

The line that relates the price of a good and the quantity demanded of that good is called the demand

unpaid internships

The minimum wage does not apply to

teenage labor

The minimum wage has its greatest impact on the market for

Minimally adequate standard of living

The minimum wage was instituted to ensure workers

What you give up to get that item

The opportunity cost of an item is

Can produce

The production possibilities frontier is a graph that shows the various combinations of output that an economy

Economics

The study of how society manages its scarce resources

Welfare Economics

The study of how the allocation of resources affects economic well-being is called

Those who sell the good or service

The supply of a good or service is determined by

Opportunity Cost

What must be given up to obtain an item is called

falls and the wage paid by firms rises

When a payroll tax is enacted, the wage received by workers

Market Power

When a single person (or small group) has the ability to influence market prices, there is

Comparative Advantage

When describing the opportunity cost of two producers, economists use the term

Rises

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

Externalities and Market Power

Which of the following can lead to market failure?

Minimum-wage laws

___________ dictate a minimum wage that firms may pay workers

Normative Statements

____________ are prescriptive, whereas positive statements are descriptive

Rent-control laws

____________ dictate a maximum rent that landlords may charge tenants

Tax Incidence

_____________ is the distribution of the tax burden between buyers and sellers

policymakers use taxes

______________ both to raise revenue for public purposes and to influence market outcomes

Tax Incidence

______________ is the manner in which the burden of a tax is shared among participants in a market

welfare economics

______________ is the study of how the allocation of resources affects economic well-being

Price Controls

______________ often hurt those they are designed to help

Demand Curve

on this graph... price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis

Market Power

power of a single person or small group to influence market prices refers to