ECON 2030 EXAM 1 - Professor macy Finck , exam 1 material PDF

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Professor macy Finck , exam 1 material...

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ECON 2030 EXAM #1 STUDY GUIDE TERMS: Economics- the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity Scarcity- the condition whereby the resources we use to produce goods and services are limited relative to our wants for them Scarce good- economic good= good for which you CANNOT get all you want at zero cost Free good- opposite of above; you CAN get all you want at zero cost Cost- the sacrifice associated with making a choice; in a standard market transaction it is paid by the PRODUCER Price- signal that tells producers what and how much to produce; in a standard market transaction it is paid by the CONSUMER Explicit cost- out of pocket; monetary payments Implicit/opportunity cost- most valued option foregone Resources/inputs/factors- the inputs used in the production of goods and services, a.k.a. factors of production Labor- physical and manual talents used in production Capital- all manufactured goods used in production Utility- the satisfaction a consumer obtains from the consumption of a good or service Marginal- additional; the change that results from an additional unit Economic principle- statements about economic behavior or the economy that enable prediction of the probable effects of certain actions Model-a simplified representation of how something works Market- any institution that brings together buyers and sellers of a particular good or service Demand schedule- a table that shows how much pf a good or service consumers will want to buy at various prices Law of Demand- the price of a good and the quantity demanded are inversely related Demand curve- a graphical representation of the quantities of a good or service that consumers are willing and able to purchase at all possible prices Quantity demanded- the number of units consumers are willing to buy at a specific price Substitutes- goods that take the place of each other in consumption; price of one good and demand for the other move together Complements- goods that are used together in consumption; price of one good and demand for the other move opposite Normal good- income and demand move together Inferior good- income and demand move opposite Supply schedule- a table that shows how much of a good or service producers will offer for sale at various prices Law of Supply- the price of a good and the quantity supplied are directly related Quantity supplied- the NUMBER of units producers are willing to offer for sale at a specific price Supply curve- a line that shows the minimum that producers are willing to accept as payment for any quantity Technology- the production process of changing economic resources into goods and services; when technology improves, supply increases

Equilibrium price-price where market clears (Qs=Qd) Willingness to pay- max price at which a consumer will buy a good Willingness to accept- minimum price producer will sell for Elasticity- a measure of the relative responsiveness of one variable to a change in another Price elasticity of demand- the ratio of the percent change in the Qd to the percent change in price Elastic- Ed>1; big ∆Qd Perfectly elastic- Ed=;horizontal, most responsive Unit elasticity- Ed=1 Inelastic- Ed...