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Cards In This Set
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The model that lyes at the heart of economics describing the behavior of markets.
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Supply and Demand
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In the product markets consumer behavior is modeled by the ______
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Demand curve
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In the resource markets the choices of households is modeled by the ______
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Supply curve
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Consumers tend to save ______ when interest rates are higher.
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More
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Is important in economics because scarcity forces consumers to make decisions.
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The Concept of Scarcity.
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When making choices consumers compare perseved costs and benefits and choose the options with the greatest relative benefits.
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Most closely defined as level of satisfaction.
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Utility
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The extra-satisfaction of the next unit consumed.
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Marginal utility
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States that, as more of a good or service is consumed, its marginal utility decreases.
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The law of diminishing marginal utility.
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If an average cost curve is U-shaped, then cost per unit first fall, then reach a minimum, and the increases when output is increased.
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In the long run there are no fixed factors of production, all factors of production are variables.
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____,______, and ______ are resources used in production
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Land, Labor, and Capital.
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Is the transformation of resources into economic goods and services.
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Production
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Describes the relationship between output and resources.
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Circular-flow chart
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The firm uses a combination of resources to produce goods and services.
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