Exam (elaborations)
ECO2013 Exam1 Hammock (1)
ECO2013 Exam1 Hammock (1)
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ECO2013 Exam1 Hammockscarcity - ANS-term associated with the limit to how much of something is available
choice - ANS-choosing some things and not others
opportunity cost - ANS-the value of the best thing given up
rational self interest - ANS-assumption that people are rational and act in their self interest
positive economics - ANS-"way the world is"; branch of economics that concerns the description
and explanation of economic phenomena.
normative economics - ANS-s a part of economics that expresses value or normative judgments
about economic fairness or what the outcome of the economy or goals of public policy ought to
be.
simple trade - ANS-the activity or process of buying, selling, or exchanging goods or services
voluntary trade - ANS-the act of buyers and sellers freely and willingly engaging in market
transactions. Moreover, transactions are made in such a way that both the buyer and the seller
are better off after the exchange than before it occurred. (creates value)
demand - ANS-as the price of a product increases, quantity demanded falls; likewise, as the
price of a product decreases, quantity demanded increases
supply - ANS-the fundamental principle of economic theory which states that, all else equal, an
increase in price results in an increase in quantity supplied.
equilibrium - ANS-market price where the quantity of goods supplied is equal to the quantity of
goods demanded.
consumer surplus - ANS-the difference between what a consumer is willing to pay and what
they actually pay.
producer surplus - ANS-the difference between what a producer is paid and the marginal cost.
total surplus - ANS-total area for the consumer surplus plus the total area for the producer
surplus.
efficiency - ANS-there is an reallocation of goods and resources that has greater benefit then
cost.
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