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Econ 200- Basic Economics- Study Guide Ch. 1-5 Key Terms and Concepts

by: Kayla Hanifen

Econ 200- Basic Economics- Study Guide Ch. 1-5 Key Terms and Concepts Econ 200

Marketplace > University of Arizona > Economcs > Econ 200 > Econ 200 Basic Economics Study Guide Ch 1 5 Key Terms and Concepts
Kayla Hanifen
GPA 2.0
Basic Economic Issues
George Mateer

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About this Document

This study guide incorporates all the key terms and concepts from chapters and lectures 1-5. All terms are organized within a color coordinated table with explanations and examples. This study guid...
Basic Economic Issues
George Mateer
Study Guide
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This 5 page Study Guide was uploaded by Kayla Hanifen on Friday September 18, 2015. The Study Guide belongs to Econ 200 at University of Arizona taught by George Mateer in Summer 2015. Since its upload, it has received 47 views. For similar materials see Basic Economic Issues in Economcs at University of Arizona.


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Date Created: 09/18/15
Chapter 1 Chapter 2 Chapter 4 Chapter 5 Economics The study of how people distribute their limited resources in order to satisfy their unlimited wants Scientific Method in Economics Use of economic models that focus on relative relationships in the economy to identify the key relationships that drive economic decisionmaking Elasticity The responsiveness of buyers and seller to changes in price or income Price Controls an attempt to set prices through government involvement in the market Scarcity The limitation of society s resources Positive Statement Can be tested or validated think of this like a statement Price Elasticity of Demand measures the responsiveness of quantity demanded to a change in price Price Ceiling A legally established maximum price for a good or service Microeconomics MICRO the smaller picture Focuses on the basic theories of supply and demand and how individual business decide how much of something to produce and how much to charge for that product gt ill Normative Statement Cannot be tested or validated think of this like an opinion Immediate Run No time for consumers to adjust their Black Markets Illegal markets that arise when price Macroeconomics Macro the bigger picture Focuses on the national economy and provides a basic knowledge of how things work in the business world quotI ll LL 1 11L i 1113 t egtag ti It Ceteris Paribus The process of examining a change in one variable while holding everything else consistent behavior controls are in place Government Interference Short Run when Nonbinding When a consumers can alter their behavior in a brief time frame price ceiling is above the equilibrium price Direct Incentives Incentives that are easily recognizable Do your chores and you ll get paid this week is a direct incentive Law of Increasing Relative Cost the opportunity cost of producing a good rises as a society produces more of it Binding Price Ceilings When a price ceiling is below the market price it prevents supply and demand from clearing the market Negative Incentives Encourage action in fear of a potential negative consequence ie you won t speed because you are afraid of getting a speeding ticket you wouldn t cheat on an exam because you are afraid of getting caught etc Production Possibilities Frontier A model that illustrates the combinations of outputs that a society can produce if all resources are being used proficiently Rent Control A local government caps the price of apartment rentals to keep housing affordable Indirect Incentives Incentives that are harder to recognize General tax reductions in overall fuel b c it lowers production and transportation costs Absolute Advantage The ability to produce more with the same quantity of resources than a competitor can produce Price Gouging Laws Places a temporary ceiling on the prices that sellers can charge during times of national emergency until markets function normally again Policy Makers Individuals with the task of deciding how to balance such con icting incentives through policy making Capital Goods Assist in the production of other valuable goods and services in the future Price Floors Create legally established minimum prices for goods or services Marginal Cost The evaluation of if the cost of doing one thing is worth the benefit Exogenous Factors Factors beyond an individuals control outside the model Minimum Wage The lowest hourly wage rate that companies may legally pay their workers Comparative Advantage Term used to describe a situation in which a force can produce a product at a lower opportunity cost than a competitor can Innovation The fuel to economic growth Consumer Good Any good that is produced for current consumption Perfectly Elastic When price is the only thing that matters ED 00 TradeOffs Doing one thing instead of using that time and energy to do something else Investment The process of using given resources to build or purchase new capital profit Total Revenue The amount that consumers pay and seller receive for a good 9 calculated by multiplying the price of the good by the quantity of the good that is sold Opportunity Cost the highestvalued alternative that must be sacrificed in order to get something else Endogenous Factors Factors that individuals know about and can control Income Elasticity of Demand measures how a change in income affects spending It is calculated by dividing the change in the quantity demanded by the change in personal income Trade The voluntary exchange of goods and services between parties Crossprice Elasticity of Demand measures the responsiveness of the quantity demanded of one good to a change in the price ofa related good Positive Incentives Incentives that encourage action ie bonuses make employees WANT to Price of Elasticity of Supply measure of responsiveness of the quantity supplied to a change in price work during the year and low coffee prices make consumers want to buy more coffee etc Trade The voluntary exchange of goods and services between parties Marginal Thinking The evaluation over one benefit of something is greater than it s cost Markets Buyers and sellers that come together to buy and sell goods and services Marginal Benefit What you are getting out of your time and energy


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