Popular in Course
Popular in Economcs
verified elite notetaker
This 3 page Class Notes was uploaded by Miss Kariane McCullough on Saturday October 3, 2015. The Class Notes belongs to EC201 at California State Polytechnic University taught by JonathanKinnick in Fall. Since its upload, it has received 9 views. For similar materials see /class/218367/ec201-california-state-polytechnic-university in Economcs at California State Polytechnic University.
Reviews for PrinciplesofEconomics
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 10/03/15
P Equot PNE NS 9 J 5quot Chapter 2 Econ Circularflow diagram a visual model of the economy that shows how dollars flow through markets among households and firms Production possibilities frontier a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology Microeconomics the study of how households and firms make decisions and how they interact in markets Macroeconomics the study of economywide phenomena including inflation unemployment and economic growth Positive statements claims that attempt to describe the world as it is Politically correct Normative statements claims that attempt to prescribe how the world should be Opinions Chapter 3 Econ Absolute advantage the ability to produce a good using fewer inputs than another producer Opportunity cost whatever must be given up to obtain some item Comparative advantage the ability to produce a good at a lower opportunity cost than another producer Trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage For both parties to gain from trade the price at which they trade must lie between the two opportunity costs Imports goods and services that are produced abroad and sold domestically Exports goods and services that are produced domestically and sold abroad Chapter 4 Econ The terms supply and demand refer to the behavior of people as they interact with one another in competitive markets Market a group of buyers and sellers of a particular good or service Competitive market a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker Quantity demanded the amount of a good that buyers are willing and able to purchase Law of demand the claim that other things equal the quantity demanded of a good falls when the price of the good rises Demand schedule a table shows the relationship between the price of a good and the quantity demanded Demand curve a graph of the relationship between the price of a good and the quantity demanded O l l wN 4 l l mm l l l 50001 NN i O l Iquot S P Equot 9 Normal good a good for which other things equal an increase in income leads to an increase in demand Inferior good a good for which other things equal an increase in income leads to a decrease in demand Substitutes two goods for which an increase in the price of one leads to an increase in the demand for the other Complements two goods for which an increase in the price of one leads to a decrease in the demand for the other Quantity supplied the amount of a good that sellers are willing and able to sell Law of supply the claim that other things equal the quantity supplied of a good rises when the price of the good rises Supply schedule a table that shows the relationship between the price of a good and the quantity supplied Supply curve a graph of the relationship between the price of a good and the quantity supplied Equilibrium a situation in which the market price has reached the level at which quantity supplied equals quantity demanded Equilibrium price the price that balances quantity supplied and quantity demanded Equilibrium quantity the quantity supplied and the quantity demanded at the equilibrium price Surplus a situation in which quantity supplied is greater than quantity demanded Shortage a situation in which quantity demanded is greater than quantity supplied Law of supply and demand the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance Chapter 5 Econ Elasticity a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants Price elasticity of demand a measure of how much the quantity demanded of a good responds to a change in the price of that good computed as the percentage change in quantity demanded divided by the percentage change in price Total revenue the amount paid by buyers and received by sellers of a good computed as the price of the good times the quantity sold Income elasticity of demand a measure of how much the quantity demanded of a good responds to a change in consumers income computed as the percentage change in quantity demanded divided by the percentage change in income Crossprice elasticity of demand a measure of how much the quantity demanded of one good responds to a change in the price of another good computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good Price elasticity of supply a measure of how much the quantity supplied of a good responds to a change in the price of that good computed as the percentage change in quantity supplied divided by the percentage change in price PNE N quot SJ EJquot gt l l kD l O39 Chapter 6 Price ceiling a legal maximum on the price at which a good can be sold Price floor a legal minimum on the price at which a good can be sold Tax incidence the manner in which the burden ofa tax is shared among participants in a market Chapter 7 Welfare economics the study of how the allocation of resources affects economic wellbeing Willingness to pay the maximum amount that a buyer will pay for a good Consumers surplus the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it Cost the value of everything a seller must give up to produce a good Producer surplus the amount a seller is paid for a good minus the seller s cost of providing it Consumer Surplusvalue to buyersamount paid by buyers Producer surplusamount received by sellerscost to sellers Total surplusvalue to buyersamount paid by buyersamount received by sellerscost to sellers Total surplusvalue to buyerscost to sellers Efficiency the property of society getting the most it can from its scarce resources Equality the property of distributing economic prosperity uniformly among the members of society
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'