1. What is economics?
    The study of how societies allocate scarce resources
  2. What are the Four Major Resources?
    • Labor/Human Capital
    • Land/Raw Materials
    • Physical Capital
    • Entrepeneurialship
  3. What type of economy is the US?
    Mixed economy
  4. How does opportunity costs differ from normal costs?
    Opportunity costs include both monetary costs and non-monetary costs.
  5. Positive Economics
    Statement of facts which can be proven or disproven
  6. Normative Economics
    Subjective statements about the economy and how things should be. Opinion-based.
  7. What is a market?
    a group of buyers and sellers of a particular product
  8. What is the law of demand?
    As price falls, quantity demand rises
  9. Two goods are substitutes if..
    An increase in the price of one causes an increase in the demand for the other
  10. Two goods are complements if..
    an increase in the price of one causes a decrease in the demand for the other
  11. What is the law of supply?
    The claim that the Qs of a good increases when the price of the good rises
  12. General Formula for Elasticity:
    • % Change in Q
    • _____________
    • % Change in Price
  13. Cross-Price elasticity of demand and formula:
    • %CHANGE IN Qd for 1
    • ---------------------------
    • % Change in price of Good 2
  14. Why would the gov't be involved in the market?
    • 1. Raise Revenue for operations
    • 2. Influence Consumer Behavior
    • 3. Improve equity
  15. Total Revenue =
    Price of Good x Quantity Supplied
  16. Tax Incidence
    The manner in which the burden of a tax is shared among participants in a market
  17. Demand for a normal good is ______ related to income
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