Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
31 Cards in this Set
- Front
- Back
The social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity.
|
Economics
|
|
Goods and services are produced using resources, which are A)________ and have B)_________ ____.
|
A) scarce
B) alternate uses |
|
Human wants for goods and services are either a)___________ or b) _______________
|
a) insatiable
b) recur |
|
Key features of the economic perspective are:
|
a) scarcity and choice
b) purposeful behavior c) marginal analysis |
|
limited goods and services that restrict options and demands choices b/c we can't have it all we must decide what we will have and what we must forgo.
|
scarce economic resources
|
|
-to obtain more of one thing, society forgoes the opportunity of getting the next best thing.
-It is the value of the next best alternative use of a resource |
Opportunity costs
|
|
"There is no free lunch." means:
|
if productive resources are used in the making of a good or service then it is never "free"
|
|
the pleasure, happiness, or satisfaction obtained from consuming a good or service
|
utility
|
|
-human beings always strive to be better off by making choices
-they would never knowingly make choices which leave them worse off |
Rational self-interest
|
|
means extra, additional, or change in
|
marginal
|
|
comparison of marginal benefit and marginal cost
|
so long as the marginal benefit exceeds the marginal cost of a choice/decision, that choice is implemented
|
|
Economics relies on the scientific method and the following elements:
|
-observing real-world behavior and outcomes
-based on those observations, formulating a possible explanation of cause and effect (hypothesis) -testing this explanation by comparing the outcomes of specific events to the outcome predicted by the hypothesis -accepting, rejecting, and modifying the hypothesis, based on these comparisons -continuing to test the hypothesis against the facts. If favorable results accumulate, the hypothesis evolves into a theory |
|
a very well-tested and widely accepted theory is referred to as an :
|
economic law or economic principle
|
|
a statement about economic behavior or the economy that enables prediction of the probably effects of certain actions
|
economic principle
|
|
extremely important in economics to make any meaningful inference
|
ceteris paribus
|
|
-backbone of most economic models
-many economic models are expressed graphically |
graphical expression
|
|
-concerned with the aggregate or the whole economy or its basic subdivisions such as the gov't, household, and business sectors
|
macroeconomics
|
|
is a collection of specific economic units treated as if they were one unit
|
aggregate
|
|
-concerned with individual units in the economy like the consumers, firms, industry
|
microeconomics
|
|
-focuses on facts and cause-and-effect relationships
-includes description, theory development, and theory testing -avoids value judgments -tries to establish scientific statements about economic behavior and deals with what the economy is actually like WHAT IS STATEMENT: IF TUITION FOR COLLEGE GOES UP, LESS STUDENTS WILL ENROLL (CENTERIS PARIBUS) |
positive economics
|
|
-economic policy involves this which incorporates value judgments about what the economy should be like or what particular policy actions should be recommended to achieve a desirable goal.
-looks at the desirability of certain aspects of the economy. WHAT OUTGHT TO/SHOULD BE STATEMENTS: THE COLLEGE SHOULD TAKE STEPS TO REDUCE TUITION. |
normative economics
|
|
-the need to make choices because economic wants exceed economic means
|
economizing problem
|
|
examples of individual's economizing problem:
|
-limited income
-unlimited wants -a budget line -tradeoffs & opportunity costs -make best choice possible -change in income |
|
scarce resources
|
-land (all natural resources)
-labor (all human effort) -capital (all man made resources) -entrepreneurial ability (bringing all the other resources together for production) |
|
-resources are also called
-"inputs" |
factors of production
|
|
Production Possibilities Model Assumptions:
|
-full employment
-fixed resources -fixed technology -two goods |
|
the economy is employing all of its available resources
|
full employment
|
|
the quantity and quality of the factors of production are fixed
|
fixed resources
|
|
The state of technology (the methods used to produce output) is constant
|
fixed technology
|
|
the economy is producing only two goods: pizzas and industrial robots. Pizzas symbolize consumer goods, products that satisfy our wants directly; industrial robots symbolize capital goods, products that satisfy our wants indirectly by making possible more efficient production of consumer goods
|
two goods
|
|
unemployment in PPC Model:
|
-any point inside the curve indicates unemployment or underemployment
-more goods and services can be produced with the existing resources and technology -This is indicated by a move towards the PPC |