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9 Cards in this Set
- Front
- Back
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What is economics and what does it concern?
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Economics is how humans make use of the available resources into goods and services that members of society wish to consume. It concerns how individuals make choices and how these decisions and actions interact with each other to determine what happens at the level of the entire economy.
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What is microeconomics?
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The branch of economics that considers regional market transactions and individual decisions that are then coordinated through market transactions.
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What is macroeconomics?
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The branch of economics that deals with the broad and general aspects of economy.
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What are the basic assumptions of economics?
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Scarcity, Trade offs, Opportunity Cost, Rationality, Gains from Trade.
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What is scarcity?
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The basic assumption that there is limited capital, energy, knowledge, and work that a society can consume. It is due to these limited quantities that people have developed the necessity to save.
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What is a trade off?
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The idea of making a choice. In order to get something, we are required to give up something.
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What is opportunity cost?
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The activity or thing that one is to give up in order to get something else.
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What is rationality?
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The strategy that people incorporate in their decision making to maximize benefits and minimize costs. People use rationality to allocate the limited resources available in a such a way that it fulfills needs and wants adequately.
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Why is trading beneficial in any market?
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Individuals and societies differ in their abilities, interests, and resources, which leads to specialization. In voluntary exchanges, both subjects mutually benefit as specialization and trade increases quantity and quality, making it efficient.
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