Macro Economics
Substitutes (smart phone vs Tablet)
-The more you buy of one, the less you will buy of the other -A decrease in the price causes the demand curve for a good to shift to the left
Complements (hotdogs vs buns)
Goods and services that are used together -A decrease in price will cause the demand curve for a good to shift right
An increase in the price of the good will
NOT shift the demand curve for a good
Marginal revenue
Office supply store sells printer paper at a fixed cost of 4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?
Raising the price of alcohol, or banning alcohol on campus, decrease the number of students who use marijuana
The two goods are complements in consumption
Inferior good
When the demand for the good decreases following a rise in income and increase following a fall in income.
Normal good
When the demand for the good increases following a rise in income and decreases following a fall in income
The phrase "demand has increased" means
a demand curve has shifted to the right
The term "Market" in economics refers to
a group of buyers and sellers of a product and the arrangement by which they come together to trade
An increase in the price of MP3 players will result in
a larger quantity of MP3 players supplied
Marginal (in economics)
an addition or extra
The attainable production points on a PPCurve
are the points along and inside the PPF
A curved line has slope values that
change at every point
If the price of propane was to decrease
demand for propane would increase
Often a trade- off between
economic efficiency and economic equity
An outward shift of a nation's PPF represents
economic growth
The Law of demand implies
holding everything else constant, that as the price of yogurt increases, the quantity of yogurt demanded will decrease
A Production Possibilities Frontier with a bowed outward shape indicates
increasing opportunity costs as more and more of one good is produced
Marginal analysis
involves undertaking an activity until its marginal benefits equal marginal costs
If the PPF is linear, then
opportunity costs are constant as more of one good is produced
Economists assume that
optimal decisions are made at the margin
Economists assume that rational people
respond to economic incentives
Increasing opportunity cost along a bowed out PPF occurs because
some factors of production are not equally suited to producing both goods or services
An increase in income leads to an increase in the demand for sushi
sushi is a normal good
The PPF model does not assume
that any level of the two products that the economy produces is currently possible
The principle of opportunity cost is
that the economic cost of using a factor of production is the alternative use of that factor that is given up
Comparative advantage means
the ability to produce a good or service at a lower opportunity cost than any other producer
Opportunity cost
the highest valued alternative that must be given up to engage in an activity
Production Possibilities Frontier shows
the maximum attainable combinations of two products that may be produced in a particular time period with available resources
Increasing marginal opportunity cost implies that
the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts
Economics
the study of the choices people make to attain their goals, given their scarce resources
If in the market for apples the supply has decreased then
the supply curve for apples has shifted to the left
Scarcity refers to the situation in which
unlimited wants exceed limited resources