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13 Cards in this Set
- Front
- Back
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Why do economists make assumptions |
Assumptions can simplify the complex world and make it easier to understand |
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What is a circular flow diagram |
A visual model of the economy that shows how dollars flow through markets among households and firms |
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What are the two types of markets |
Markets for goods and services Markets for the factors of production |
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Who is the seller for markets of goods and services |
Firms |
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Who is seller for markets for the factors of production what is the production possibilities frontier |
Households |
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What is the production possibilities frontier |
A graph that shows the combinations of output that an economy can possibly produce given the available factors of production and the available production technology |
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What is microeconomics |
The study of how households and firms make decisions and how they interact in specific markets |
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What is macroeconomics |
The study of economy wide phenomena |
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What is positive analysis versus normative analysis? |
Positive analysis: are descriptive Normative analysis: are prescriptive |
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List the reasons why economists disagree |
Differences in scientific judgments Differences in values Perception versus reality |
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In graphing what is a positive correlation |
When two variables move in the same direction |
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What is a negative correlation and graphing |
When two variables move in opposite directions |
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When does a demand curve shift |
When a relevant variable that is not named on either axis changes |
