CPI measurements- measure overall cost of goods and serv.

bought by a typical consumer

inflation-an increase in the overall prices in an econ.
phillips curve- a curve that shows the short run tradeoff between inflation and unemployment
coase theorem- the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their
own
opportunity cost- whatever must be given up to gain some item
absolute advan.-the comparison among producers of a good according to their productivity
comparative advan.-the comparison among producers of a good according to their opportunity cost
externality-the uncompensated impact of one persons actions on the well being of a bystander
efficiency-the property of socity getting the most it can from its scarse resourses
macro econ-the study of economy wide phenomena including, inflation,unemployment and econ. growth
micro econ- the study of how house holds and firms make decisions and how they interact in markets
monopoly-a firm that is a sole seller of a product without close substitutes
oligopoly- is a market form in which a market or industry is dominated by a small number of sellers
scarcity- imited resources
invisible hand- is the term economists use to describe the self-regulating nature of the marketplace. This is a metafor first coined by the economist adam smith, and used a total of 3
times For Smith, the invisible hand was created by the conjunction of the forces of self interest competion, and supply and demand, which he noted as being capable of allocating
resources in society. This is the founding justification for the laissez faire economic philosop
real interest rate measures-inflation
equity-property of distributing equally
economics- the study of how econ manages its scarce resourses
circular flow diagram- avisual model of the econ that shows how dollars flow through markets among house holds and firms
competitive market- a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker
price taker- someone who isnt large enough to effect a price of someth
supply curve- graph showing supply of a product or service that would be available at different price points
demand curve- graph of the relationship between the price of a good and the quantity demanded
equilibrium-quantity supplied Equals quantity demanded
market- a group of buyers and sellers of a particular good or servise
normal good-a good for which other equal in increse in income leads to an increse in demand
inferior good-a good for which other things equal an increase in income leads to a decrease in demand
substitutes- 2 goods for which an increse in the price of one leads to an increse in the demand for the other
compliment-2 goods for which an increase in the price of one leads to a decrease in the demand for the other
surplus-situation in which quantity supplied is greater than quantity demanded
shortage- situation in which quantity demanded is greater than quantity supplied
law of supply-the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises
law of demand- claim that other things equal, the quantity demanded of a good falls when the price of the good rises
revenue- turnover money made heaw
price floor-legal min
price ceiling legal max
cost of living- amount by which income must rise in order to maintain a constant standard of living
elasticity-a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants
tariff-a tax on goods produced abroad and sold domestically
surcharge- extra fee added to the other fee like tax on my milk
pigovian tax-a tax enacted to correct the effects of a negative externality
nominal cost- the money cost of production
social cost-private cost??
total cost- a market value of the inputs a firm uses in production
allocation- distribution of a limited quantity resourses over various time periods, products, operations or investments
arbitrage-taking advan of price difference between 2 or more markets
price discrimination- the business practice of selling the same good at different prices to different customers
natural monopoly- able to change what each person is willing to pay
real GDP-production of goods and services valued at constant prices
nominal GDP-production of goods and services valued at current prices
GNP-gross national product- market value of all goods and services produced in one year by labor and property supplies by residents of a country
investment-spending on capital equip, inventories,and structures including household purchases of new housing
CPI-consumer price index-measure of overall cost of goods and services bought by a typical consumer
base year-economics financial index used usuualy recent
consumption-spending by households on goods and servises w exception of purchasing anew home
interest rates-charged for the use of money
implicit costs-hidden, do not require an out lay of money by a firm
explicit cost-require an out lay of money by firm
marginal-things u might not pay regularly
sunk cost-commited and cant be recovered
fixed cost-cost youre going to pay no matter what
substitution bias-cause the cpi failes to ackwoledge the consumers substitution of less expensive products for more expensive products overstates the inerrate in cost of living??
price elasticity= percent change in quanity demand devided by percent change in price
deadweight loss-brad pays money for wrappin henrys present, but henry tears open wrappin. the money brad wasted on nothing.