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46 Cards in this Set
- Front
- Back
the situation where unlimited wants exceed the limited resources available to fulfill those wants
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scarcity
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the study of the choices people make to attain their goals, given their scarce resources
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economics
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list three important economic ideas
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..people are rational
..people respond to incentive ..optimal decisions are made at the margin |
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a simplified version of reality
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model
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an institution that brings together buyers and sellers of a good or service
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market
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an extra or additional benefit or cost of a decision
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margin
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watching tv versus studying -- what is the marginal benefit? what is the marginal cost?
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benefit: enjoyment
cost: lower grade from having studied less |
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true/false: marginal benefits = marginal costs creates a positive outcome
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TRUE
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analysis that involves comparing marginal benefits to marginal costs
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marginal analysis
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the idea that because of scarcity, producing more of one good or service means producing less of another good or service
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trade-off
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the highest valued alternative that must be given up to engage in an activity
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opportunity costs
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your sitting in class learning when you would rather be doing something else.. what is the opportunity cost of going to class?
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..doing something else you enjoy more. Ex: beach, sleep, work, etc.
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an economy in which the government decides how economic resources will be allocated (ex: soviet union or cuba)
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centrally planned economy
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an economy in which the decisions of households and firms interacting in markets allocate economic resources
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market economy
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an economy in which most economic decisions result from the interactions of buyers and sellers in markets, but where the government plays a significant role in the allocation of resources (ex: usa, canada, japan, etc)
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mixed economy
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occurs when a good or service is produced at the lowest possible cost
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productive efficiency
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occurs when production reflects consumer prefrences -- marginal benefit = marginal cost
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allocative efficiency
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a situation in which the buyer and seller of a product are made better off by the situation
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voluntary exchange
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best use of resources
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efficiency
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the fair distribution of economic benefits
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equity
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true/false: equity, equality, and trade-off all relate together
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TRUE
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1. decide
2. formulate 3. use 4. revise 5. retain |
steps to develop a model
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model are based on making ________.
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assumptions
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something measurable that can have different values, such as the wages of software programmers
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economic variables
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believed outsourcing would lead to an economic decline
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Samuelson
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analysis concerned with "what is" -- describes
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positive analysis
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analysis concerned with "what ought to be" -- judges
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normative analysis
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the study of how households and businesses make choices, how they interact in markets, and how the government attempts to influence their choices
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microeconomics
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the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth
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macroeconomics
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the practical application of an invention
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innovation
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processes businesses use to create products or services
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technology
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total amount recieved for a product
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revenue
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revenue - costs
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profit
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labor, capital, land
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factors of production
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manufactured goods that are used to produce other goods and services (Ex: computers)
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capital
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the study of how consumers react to changes in product prices and how firms decide what prices to charge
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microeconomics
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study of policy issues, such as reduced smoking, costs and benefits of new drugs, and efficient ways to reduce pollution
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microeconomics
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study of the result of government interventions and the comparison between country economics
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macroeconomics
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change in y
-------------- change in x |
slope = opportunity cost
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2nd yr - 1st yr
---------------------- x 100 1st yr |
percentage change
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base x height
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total revenue / area of a rectangle
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a curve showing the ATTAINABLE combinations of two products that may be produced with availabile resources
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production possibilities frontier
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the highest valued alternative that must be given up in order to engage in an activity
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opportunity cost
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the ability of an individual, firms, or country to produce more of one good or service then competitors using the same amount of resources
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absolute advantage
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the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost (slope) then other producers
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comparative advantage
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the basis for trade is __________.
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comparative advantage
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