Microeconomics Flashcards

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 115 flashcards covering Microeconomics.

Free good
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A good that is demanded, but not limited in quantity, thus it is not scarce. Air is an example.

Free good
Normal Good
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Goods that consumers demand more of as their incomes rise and less of as their incomes fall. For example restaurant meals.

Normal Good
Black market
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Informal, unofficial markets in which goods are exchanged free of government control. Black market sometimes emerge if price controls exist in the formal market for the good. For example, if the government sets a price ceiling on gasoline, shortages will arise and it may become available on a black market for a price higher than that allowed by the government.

Black market
Economic resources
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Land, labor, capital, and entrepreneurial ability which are used in the production of goods and services. They are economic resources because they are scarce (limited in supply and desired). Also called the factors of production.

Economic resources
Deadweight loss
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(Welfare loss): The loss of total societal welfare (consumer and produce surplus) that occurs when a market is producing at a level of output that is not socially optimal (where MSB=MSC). May arise from a market failure or from a government intervention in an already efficient market.

Deadweight loss
Disequilibrium
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When the price in a market is either too high or too low, so that the quantities supplied and demanded are not the same. If a price is higher than equilibrium, there will be a surplus in the market, meaning the quantity supplied will be greater than the quantity demanded. If a price is below equilibrium, there will be a shortage, meaning that the quantity demanded will be greater than the quantity supplied.

Disequilibrium
Positive statement
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A claim which can be proven with facts. For example, “The unemployment rate has risen for two consecutive quarters.”

Positive statement
Land
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Includes all natural resources needed to undertake production of goods or services: including soil, timber, minerals, fossil fuels, fresh water, livestock, fish, etc… “the gifts of nature”

Land
Unit elastic Demand
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When a particular change in the price of a good is met by a proportionally identical change in the quantity demanded. A PED coefficient of 1 indicates unit elastic demand.

Unit elastic Demand
Marginal Social Benefit (MSB)
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The benefits experienced by the individual consumers of a particular good, plus or minus any social or environmental benefits or costs. MSB can be greater than marginal private benefit (MPB) if there are positive externalities of consumption (e.g. education) or less than MPB if there are negative externatlities of consumption (e.g. smoking).

Marginal Social Benefit (MSB)

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