Download Macro Exam 1 | ECON 2105 - Principles of Macroeconomics and more Quizzes Introduction to Macroeconomics in PDF only on Docsity!
Comparitive Advantage
In economics, the law of comparative advantage says that two countries can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods. TERM 2
Production Possibilities Frontier
DEFINITION 2 In economics, a production-possibility frontier, sometimes called a production-possibility curve or product transformation curve, is a graph that compares the production rates of two commodities that share the same factors of production. ...because the PPF is bowed outward, the opportunity cost of a cell phone increases as the quantity of cell phones produced increases TERM 3
Market
DEFINITION 3 A market is any one of a variety of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. TERM 4
Labor
DEFINITION 4 Work time and work effort that people devote to producing goods and services TERM 5
Entrepreneurship
DEFINITION 5 Human resource that organizes labor, land, and capital
Capital
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. TERM 7
Land
DEFINITION 7 The "gifts of nature" that we use to produce goods and services TERM 8
Marginal Benefit
DEFINITION 8 In economics, the marginal utility of a good or service is the utility gained from an increase (or decrease) in the consumption of that good or service. TERM 9
Marginal Cost
DEFINITION 9 In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. TERM 10
Rational Choice
DEFINITION 10 One that uses the available resources to best achieve the objective of the person making the choice
Normal Good
A good for which demand increases when income increases TERM 17
Opportunity Cost
DEFINITION 17 Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen. TERM 18
Free Lunch
DEFINITION 18 Giving something without giving up something else TERM 19
Scarcity
DEFINITION 19 Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources. TERM 20
Self-Interest
DEFINITION 20 Self-interest generally refers to a focus on the needs or desires of oneself.
Social Interest
The choices that are best for society as a whole TERM 22
Sunk Cost
DEFINITION 22 In economics and business decision-making, sunk costs are retrospective costs that have already been incurred and cannot be recovered. TERM 23
Production Efficiency
DEFINITION 23 a situation in which we cannot produce more of one good or service without producing less of something else TERM 24
Tradeoff
DEFINITION 24 Giving up one thing to get something else TERM 25
Opportunity Cost Equation
DEFINITION 25 For a cell phone: The decrease in the quantity of DVDs / by the increase in the number of cell phonesOC increases as more cell phones are producedWhen the opportunity cost of a cell phone is X DVDs the oc of a DVD is 1/X cell phones
Market Equilibrium
occurs when the quantity supplied= quantity demanded TERM 32
Equilibrium Price
DEFINITION 32 PRICE @ WHICH quantity demanded=quantity supplied TERM 33
Equilibrium Quantity
DEFINITION 33 quantity bought and sold @ equilibrium price TERM 34
PRICE ELASTICITY OF
DEMAND
DEFINITION 34 shows the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. TERM 35
Percentage Change in Price
DEFINITION 35 (NEW PRICE- INITIAL PRICE) X100 INITIAL PRICE
MIDPOINT METHOD
(NEW-INITIAL)(NEW-INITIAL)/2 X
TERM 37
ELASTIC
DEFINITION 37 the percentage change in the quantity demanded exceeds the percentage change in the price TERM 38
UNIT ELASTIC
DEFINITION 38 the percentage change in the quantity demanded equals the percentage change in the price TERM 39
INELASTIC
DEFINITION 39 the percentage change in the quantity demanded is less than the percentage change in the price
