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