Applied Ec Midterm
Terms
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- Disadvantages of Buying a House
- responsible for upkeep, more difficult to move, property taxes
- Invoice Price
- what the dealer pays
- Resources Markets
- sell resources to business
- Income -- normal vs. inferior goods
- demand increases w/ income for normal goods but decreases w/ income for inferior goods
- MLS
- list houses currently on market
- Law of demand
- consumers buy more of a product as price fals and less as price rises
- Mixed Economic System
- most resources and production privately controlled, govt. involvement
- Financing
- loan payments, dont have to pay at once, own car
- Loser of Inflation
- fixed income, lenders, savers
- Law of supply
- producers sell more of a product as price rises and less as price falls
- Demand-pull
- too much money causes people to bid prices up
- Product Markets
- sell products to consumers
- Sticker Price (MSRP)
- price on the lot
- Disadvantages of Renting
- no ownership or equity, less privacy
- Population size
- demand increase w/ pop increase
- Consumer Price Index
- measures inflation by tracking the price of a basket of consumer goods
- Federal Revenue Sources
- income taxes
- Interest Rate Factor
- used to find mortgage payments
- Price ceilings
- maximum price set below equilibrium price, causes shortage, may cause illegal markets to form
- Leasing
- dont own car, new car every few years, cant put alot of miles on car
- Consumer tastes
- demand increases w/ consumer tastes
- Prices of substitutes vs. complements
- demand increase if substitutes become more expensive or if complement becomes less expensive
- technology
- supply increase
- Advantages of Renting
- easier to move, less responsibility
- Capitalism Economic System
- private property, competition, specialization
- Down Payment
- money paid up front
- Inflation
- general rise in price levels, measures cost of living and health of economy
- Cost-push
- sudden price increase/drop in quantity of key resource causes prices to jump
- Price floors
- minimum price set above equilibrium price, causes surplus
- Monthly mortgage payment
- (loan principal x interest rate factor) / 1000
- Command Economic System
- govt. controls resources and production
- Change in supply
- entire curve shifts
- Communism Economic System
- govt. controls ALL resources and production w/ no economic/political freedoms
- Rationing
- allowing a person to get so much of a good
- Winners of Inflation
- property owners, borrowers, govt.
- Traditional Economic System
- self-sufficient production, bartering
- Change in quantity supplied
- new point on same curve
- Regressive Tax Structures
- higher tax rate as income drops, tax rate not income adjusted but based on property
- Number of businesses
- supply increases w/ # of business
- Progressive Tax Structures
- higher tax rate as income increase, rich able to pay higher taxes
- Loan Principal
- amount borrowed = purchase price - down payment
- Socialism Economic System
- govt. controls much resources and production but still may allow economic/political freedoms
- Resources quality
- supply increase
- Change in demand
- entire curve shifts
- State Revenue Sources
- sales and exices taxes
- Market Equilibrium
- where demand = supply
- Advantages of Buying a House
- ownership, can remodel as wish, build equity
- Dealer holdback
- what dealer gets on selling a car
- Resource Amount
- supply increase w/ amount of resources
- Local Revenue Sources
- property taxes
- Equilibrium price and quantity
- price and quantity at equilibrium
- Pure Market Economic System
- resources and production all privately controlled, no govt. interference
- Cash purchasing
- no loan payment, no returns, alot of cash at once
- Change in quantity demanded
- new point on same curve
- Mortgage Payments
- includes loan payments, RE taxes and home insurance, earning loan payments go mostly toward interest payments