Econ 20

• The study of how best to allocate scarce resources
• among competing uses.

• The most desired goods and services that are
• forgone in order to obtain something else.

• resource inputs used to produce goods and
• services: e.g.

• ·     
• Land

·Labor

• ·Capital
• ·Entrepreneurship

• Lack of enough resources to satisfy all the
• desired uses of those resources.

• The alternative combinations of goods and services
• that could be produced in a given time period with all available resources and
• technology.

• Expenditures on (production of) new plant and
• equipment(capital) in a given time period, plus changes in business
• inventories.

• An increase in output ( real GDP); an expansion of
• production possibilities.

• The doctrine of “ leave it alone,” of
• nonintervention by government in the market mechanism.

• - Economic
• planning (also central planning and central Economic planning (also central
• planning and central economic planning) refers to any directing or planning of
• economic activity by the state, in an attempt to achieve specific economic or
• social outcomes. 

• – An economy that uses both market and non-market signals to allocate goods and
• resources.

• An imperfection in the market mechanism that
• prevents optimal outcomes.

• Costs ( or benefits) of a market activity borne by
• a third party; the difference between the social and private costs (or
• benefits) of a market activity.

Government intervention fails to improve economic outcomes

The use of market prices and sales to signal desired outputs( or resource allocations)

The inflation-adjusted value of GDP: the value of output measured in constant prices.

The value of output measured in current prices.

Total GDP divided by total population: Average GDP

Payments to individuals for which no current goods or sevice are exchanged; e.g. Social Security, Welfare, Unemployment benefits

Goods and Services sold to foreign buyers.

Goods and Services purchased from foreign sources.

Production processes that use a high ratio of capital to labor inputs.

Output per unit of input, E.G. output per labor hour

The knowledge and skills possessed by the workforce

A firm that produces the entire market supply of a particual good or service.

The way total personal income is divided up among households or income classes.

A tax system in which tax rates rise as incomes rise

A tax system in which tax rates fall as income rise

Any place where goods are bought and sold.

Any place where factors of production are bought and sold

Any place where finished goods and services are bought and sold.

The direct exchange of one good for another, without the use of money

The ability and willingness to sell specific quantities quantities of a good at alternative prices in a given period. ceteris paribus

The ability and willingness to buy specific quantities of a good at alternatice prices in a given time period, ceteris paribus

A table showing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus

A curve describing the quantities of a good a consumer is willing and able to buy at alternative prices in a given time period, ceteris paribus.

A change in the quantity demanded at any(every) given price.

The total quantities of a good or service people are willing and able to buy at alternative prices in a given time period; the sum of individual demands.

The total quantities of a good that sellers are willing and able to sell at alternative prices in a given time period, ceteris paribus.

The quantity of a good supplied in a given time period increases as its price increases, ceteris paribus.

the price at which the quantity of a good demnded in a given time period equals the quantity supplied.

The amount by which the quantity demanded exceeds the quantity supplied at a given price: excess demand

The amount by which the quantity supplied exceeds the quantity demanded at a given price: excess supply

Upper limit imposed on the price of a good or service.

Lower limit imposed on the price of a good

The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.

The pleasure of satifactin obtained from a good or service.

The amount of satisfaction obtained from entire consumption of a product.

The satisfaction obtained by consuming one additional (marginal) unit of a good or service

The marginal utility of a good declines as more of it is consumed in a given time period.

The percentage change in quantity demanded divided by the percent change in price.

The price of a product multiplied by the quantity sold in a given time period P x Q

• A technological relationship expressing the
• maximum quantity of a good attainable from different combinations of factor
• inputs.

The change in total output associated with one additional unit of input.

The marginal physical product of a variable input declines as more of it is employed with a given quantity of other (fixed) inputs.

The period in which the quantity (and quality) of some inputs cannot be changed

A period of time long enough for all inputs to be varied (no fixed costs)

The difference between total revenue and total cost.

The market value of all resources used to produce a good or service

Costs of production that do not change when the rate of output is altered, e.g., the cost of basic plant and equipment

• Costs of production that change when the rate of
• output is altered, e.g., labor and material costs.

• Total cost divided by the quantity produced in a
• given time period.

• The increase in total cost associated with a
• one-unit increase in production.