Econ 205 Chapter 1

society is getting the maximum benefits from its scarce recourses

when the market fails to allocate society's resources efficiently

whatever must be given up to obtain something else

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

a graph that shows the combinations of two goods the economy can possibly produce given the available resources and the available technology

the ability to produce a good using fewer inputs than another producer

goods produced domestically and purchased by foreign buyers

goods produced abroad and purchased by domestic residents

the ability to produce a good at a LOWER opportunity cost than another producer

one with many buyers and sellers, each has a negligible effect of price

when all goods are exactly the same; buyers and sellers so numerous that nobody can affect market price

the amount of the good and that buyers are willing and able to purchase

the claim that the quantity demanded of a good falls when the price of the good rises, other things rise equal

the amount that sellers are willing and able to sell

the claim that the quantity supplied of a good rises when the price of the good rises, other things equal

A shift in the S curve that occurs when a none price determinant of supply changes

a movement along a fixed S curve that occurs when P changes

a shift in the D curve that occurs when a non price determinant of demand changes

a movement along fixed D curve that occurs when P changes

P above equilibrium, quantity supplied is greater than the demand

P below equilibrium, quantity demanded is greater than quantity supplied

P has reached the level where quantity supplied equals the quantity demanded