BRCC ECON 2113 Midterm
Economics - answer the study of how humans make decisions in the face of scarcity
Microeconomics - answer focuses on the actions of individual agents within the
economy, like households, workers, and business
Macroeconomics - answer the branch of economics that focuses on broad issues such
as growth, unemployment, inflation, and trade balance
scarcity - answer human wants for goods, services, and resources exceed what is
available
circular flow model - answer shows how households and firms interact in the good and
services market, and in the labor market
trade offs - answer any situation where making one choice means losing something
else, usually forgoing a benefit or opportunity.
rational behavior - answerdecision making process that is based on making choices that
result in the optimal level of benefit or utility for an indiviudal
opportunity cost - answerindicates what one must give up to obtain what he or she
desires
budget constraint - answerall possible consumption combinations of goods that
someone can afford, given the prices of goods, when all income is spent; the boundary
of the opportunity set
production possibility frontier - answera diagram that shows the productively efficient
combinations of two products that an economy can produce given the resources it has
available
PFF opportunity cost - answerproducing a specific good is different in other countries.
either because of different climates, geography, technology, or skills
PFF efficiency - answerwhen it is impossible to produce more of one good without
decreasing the quantity produced of another good
PFF economic growth - answeroccurs when an economy's production at the full
employment level increases
, utility - answersatisfaction, usefulness, or value one obtains from consuming goods and
services
diminishing marginal utility - answeras a person receives more of a good, the additional
utility from each additional unit of the good declines
sunk costs - answercosts that were incurred in the past and cannot be recovered
demand - answerthe amount of some good or service consumers are willing and able to
purchase at each price
law of demand - answerkeeping all other variables that affect demand constant (price
goes up, quantity demand goes down. price goes down, quantity demanded goes up.)
demand curve - answercan be used to identify how much consumers would buy at any
given price (quantity: x, price: y)
increased demand - answerat every given price, the quantity demanded is higher, so
that the demand curve shifts to the right
decreased demand - answerat every given price, the quantity demanded is lower, so
that the demand curve shifts to the left
shift in demand - answeroccurs when a change in some economic factor (other than
price) causes a different quantity to be demanded at every price
factors that affect demand - answer-income
-changing tastes/preferences
-changes in the composition of the population
-price of substitute or complement changes
-changes in expectations about future
supply - answerthe amount of some good or service a producer is willing to supply at
each price
law of supply - answerassuming all other variables that affect supply are held constant:
if price goes up, then quantity supplied goes up. if price goes down, then quantity
supplied goes down.)
supply curve - answera graphic illustration of the relationship between price, shown on
the "y", and quantity, show on the "x"
equilibrium - answerthe combination of price and quantity where there is no economic
pressure from surpluses or shortages that would cause price or quantity to change
(quantity demanded=quantity supplied)
Economics - answer the study of how humans make decisions in the face of scarcity
Microeconomics - answer focuses on the actions of individual agents within the
economy, like households, workers, and business
Macroeconomics - answer the branch of economics that focuses on broad issues such
as growth, unemployment, inflation, and trade balance
scarcity - answer human wants for goods, services, and resources exceed what is
available
circular flow model - answer shows how households and firms interact in the good and
services market, and in the labor market
trade offs - answer any situation where making one choice means losing something
else, usually forgoing a benefit or opportunity.
rational behavior - answerdecision making process that is based on making choices that
result in the optimal level of benefit or utility for an indiviudal
opportunity cost - answerindicates what one must give up to obtain what he or she
desires
budget constraint - answerall possible consumption combinations of goods that
someone can afford, given the prices of goods, when all income is spent; the boundary
of the opportunity set
production possibility frontier - answera diagram that shows the productively efficient
combinations of two products that an economy can produce given the resources it has
available
PFF opportunity cost - answerproducing a specific good is different in other countries.
either because of different climates, geography, technology, or skills
PFF efficiency - answerwhen it is impossible to produce more of one good without
decreasing the quantity produced of another good
PFF economic growth - answeroccurs when an economy's production at the full
employment level increases
, utility - answersatisfaction, usefulness, or value one obtains from consuming goods and
services
diminishing marginal utility - answeras a person receives more of a good, the additional
utility from each additional unit of the good declines
sunk costs - answercosts that were incurred in the past and cannot be recovered
demand - answerthe amount of some good or service consumers are willing and able to
purchase at each price
law of demand - answerkeeping all other variables that affect demand constant (price
goes up, quantity demand goes down. price goes down, quantity demanded goes up.)
demand curve - answercan be used to identify how much consumers would buy at any
given price (quantity: x, price: y)
increased demand - answerat every given price, the quantity demanded is higher, so
that the demand curve shifts to the right
decreased demand - answerat every given price, the quantity demanded is lower, so
that the demand curve shifts to the left
shift in demand - answeroccurs when a change in some economic factor (other than
price) causes a different quantity to be demanded at every price
factors that affect demand - answer-income
-changing tastes/preferences
-changes in the composition of the population
-price of substitute or complement changes
-changes in expectations about future
supply - answerthe amount of some good or service a producer is willing to supply at
each price
law of supply - answerassuming all other variables that affect supply are held constant:
if price goes up, then quantity supplied goes up. if price goes down, then quantity
supplied goes down.)
supply curve - answera graphic illustration of the relationship between price, shown on
the "y", and quantity, show on the "x"
equilibrium - answerthe combination of price and quantity where there is no economic
pressure from surpluses or shortages that would cause price or quantity to change
(quantity demanded=quantity supplied)
