econ 101 2nd mitermm
Terms
undefined, object
copy deck
- indifferance curves
- complete = consumer must say a p b or B p A or A= B relfexic= a is always as good an indea as b transitive= a p b and bpc then a p c no cicularity. these subjective preferences are given or exogenous.
- total utility
- the total satisfaction resulting fomr the consumption of a given commodity by a consumer
- marginal utility:
- the additional satisfaction obtained by a consumer from consuming one addituona unit of a commodity
- subsitution effect
- when purchasing power is held constant, the change in quanity demanded of ag ood whose relativer price has chanes is called subsition effect.
- income effect
- the change in the quanitty of ice cream demanded as a result of tonys reaciton to inceased real income is called income.
- normal good
- income effect and subsitution effect both postive
- inferior good
- subsition effect postive income effect negative but less then substituion effect
- giffen good
- income effect is opposate direction of subsitition effect and is of a greater magnitude (note that the size of the income effect depends on the amount of income spend on the good whose price chagnes and on the amount by which the price changes.
- real income
- income expressed in terms of purchasing power of money income, that is the qaunity of good and services that can be purchased with the money income
- Paradox of value
- why are diamonds with more than water, the marginal values due to supply are very differant. , which mask the consumer rusplus received from each (becuase the market price of a product depends on both demand and supply ther is nothing paradoxical in there being a product on which consumers place a high total value such as water and a low selling price hence having a low marginal value.
- diminishing rate of marginal subsition
- convex orgin of the curve , the shape measn taht hug is willign to sacrifice less and less clothing to get each additional unit of food.
- marginal substituion
- change in y/ change in X
- conspicuos consumption good
- the demand si proably negtivley sloped if consomer could buy the good without anyone knwoing the rpice., these good may exsit for invidual but not for entire market,
- single propreitorship
- has one owner manager who is personally responcible for all aspects of the buisness debts
- ordinary partnerships
- has two or more joint owners each of whom is personally responcible for all parternships debts
- limiited partnership
- general partners take part in running the buisness and are laible for the firms debts, limited partners take no part in runnign the buisness and are only liable to the amoung they acutaly invest.
- coporation
- firm is regraded in law as having an idenity of its own owners are not personally responcible for anything that is done in the name of the firm, shares of parice corpare are not traded for anything that is done in the name of the firm, teh shares of a private corporate are not traded at any stock exchange but a public corporation are.
- financial capital
- the money a firm rasies for carrying on tis buisneses somtime called it finical capital, as dinstict fromr eal captial which is the firms physial assets such as factories machinery office sotcks for materials and finnished goods.
- equity
- fund provided by the owners of the firm shares of a single investment.
- dividents
- profits paid out to shareholders of a coporation somtimes called distributed profits.
- bonds
- a debt instruemnt carrying a specified shedule of interest payments usually a date for redemption of its face value.
- debt
- in this case the firms creditors are not its owners, they have lent money in return current profits rather than paying them out to shareholderes. financing investment form such undsitrubted proftis has becoem an important source fo fudnign in modtner times.
- intermediate prodcuts
- all outputs that are sued as inputs by othe rproducers in a fruture state of production
- production function
- a functional relatiomnship showing the maximum output that can be prodcued by each adn every combiantion fo inputs
- economic profits
- the differance between reveanues received from the sale of output and the opportunity costs of inopused used ot make the output, negative conomic profits are called economic losses. factors opportunity cost of owerns time opportunity cost of owners captail what could be earned by a riskless loan also what teh firm could earn in additiont o this amoutn by lending tis money to anouther firm were risk of defail was equal to the forms own risk of loass
- short run
- a period of time in which the quanity of osme inputs cannot be increased beyond the fixed amount that is available
- long run
- a period of time in which all inputs may be varied by existing technology of production cannot be cahnged
- very long run
- a period of time that is long enough for the tecnological psosiblity of a firm
- production
- transformation by firms of inputs into outputs
- outputs
- goods and services, commodities
- the five factors of production
- capital land labour technology entraupanuriship.
- Sunk cost
- asset that has no alternative use , speicalized computer program exluced form opporunity cost.
- Normal profit
- the retrun to technology and entrepenuship implicit cost to risk taking, nromal cust is the cost of just staying in buisness.
- zero economic profit
- when a firm is makign zero economic profit, the firm is allocatively efficeint.
- Average product
- tp/n
- marginal product
- the change in Tp/ the chagne in N
- law of diminshing marinal product
- as more of teh varible factor is added to a given amount of fixed factor the additiona output diminishes after a certain point inflection pt, ceteris paribus. reasons 1) more variable factor has less ofa fixed factor to work with
- marginal cost
- change in tc / change in Q
- tecnical effeiceincy
- when a givne number of inputs are combined in such a way to maximize the level of output.
- principle of substituion
- the principle method of production will change if the relative price of inputs change if the relative prices of inputs change with realtivly more of a cheeper inout and relativly more expensive units bein gused.
- economies of scale
- reducrtion of long run average costs resulting from expansion of firms operations, as more inputs are beng used.
- increasing returns to scale
- a situation in which output increases more than the porporation of inoous the sacle produce increase
- innovation
- new tecniques, process of inviation, using buldozzers instead of labour improve inputs, aliminum instead of steel new productsion new goods and services are constatly being inveted and marekted this is caled product innovation
- minimrm efficent scale
- the lowester quanity were costs are lowest