Missouri State ECO 155 Exam 1
Model
A simplified representation of a real situation
factor that shifts the demand curve
Changes in expectations
factor that shifts the demand curve
Changes in income
Factor that shifts the supply curve
Changes in input prices
factor that shifts the demand curve
Changes in prices of related goods
factor that shifts the demand curve
Changes in taste
factor that shifts the demand curve
Changes in the number of consumers
What economics studies
Choices made by individuals
Production Possibility Frontier (PPF)
Illustrates the trade-offs facing an economy that produces only two goods
Markets fail to achieve efficiency
Individual actions have side affects that aren't properly taken care of
Equilibrium price
Quantity demand=quantity supplied (of a good)
Shift in supply curve
a change in quantity supplied of a good at any given price
Movement along the demand curve
a change in the quantity demanded of a good that is the result of a change in that goods price
Complements
a fall in the price of one causes a fall in the price of another
Substitutes
a fall in the price of one, makes consumers want the other good
demand curve
a graphical representation of the demand schedule
Law of demand
a higher price of a good, all other things equal, leads people to demand a smaller quantity of the good
Quantity Supplied
amount of a good or service sellers are willing to sell at some specific price
forecast
any prediction for the future
Movement in supply curve
change in quantity supplied of a good that is a result of a change in that goods price
Shift of the demand curve
change in the quantity demanded at any given price, represented by the change of the original demand curve to a new position
Factor that shifts the supply curve
changes in expectation
Factor that shifts the supply curve
changes in number of producers
Factor that shifts the supply curve
changes in technology
equity
everyone gets his or hers fair share
Market supply curve
horizontal sum of the individual supply curves
The law of increasing Opportunity costs
if the frontier is bowed out, the opportunity cost increase as more of one good is produced
Individual supply curve
illustrates the relationship between quantity supplied and price for an individual producer
Absolute Advantage
in an activity, if an individual can do better than other people can
Comparative Advantage
in producing a good, if the opportunity cost of producing the good is lower for an individual than for other people
supply and demand model
model that illustrates how a competitive market works
interaction of choices
my choices affect you choices, and vice versa
Competitive market
one in which there are many buyers and sellers
Markets fail to achieve efficiency
one party tries to capture a greater share of resources for itself
Trade
providing goods and services to others, and receiving goods and services in return
Factors of production
resources used to create the goods and services
Demand schedule
show how much of a good consumers are willing and able to buy at different prices
Supply curve
shows graphically how much of a good or service sellers are willing to sell at any given price
Supply schedule
shows how much of a good or a service producers are willing to sell at some specific price
Markets fail to achieve efficiency
some goods can't be managed efficiently by markets
quantity demanded
the actual amount consumers are willing to buy at some specific price
positive economics
the branch of economic analysis that describes the way the economy actually works
Scarcity of resources
the quantity available of something is not large enough to satisfy all productive uses
technology
the technical means for producing goods, and services
Opportunity Cost
the true cost of something
An efficient economy
when a country takes all opportunities to make some people better off, while not making the others worse
Equilibrium
when no individual would be better off taking another action
Specialization
when people only do the task they are best and most efficient at doing
