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15 Cards in this Set
- Front
- Back
Economics
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-The study of scarcity
-The study of unlimited wants and limited resources. |
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Scarcity
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-implys that society has unlimited wants and limited resources.
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Scarce Goods
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Something....
(money,time,almosteverything) must be given up to obtain it. (Clean air is NOT scarce) |
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Opportunity Cost (O.C)
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*What you give up to get that item*--Highest value foregone alternitive..*
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Positive Statements
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Has to do with what IS...
(FACTS not opinions) Can it be proven true OR false |
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Normative Statements
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Have to do with what SHOULD be.
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How do we make positive statements in economics?
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Models or Theories
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Supply and Demand graphs are what type of diagrams?
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L(X) diagrams
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4 Properties of models
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1) Simple (Answer the ?)
2) General 3) Useful in Predicting 4) Testable |
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PPF-Production Possibilities Frontier
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A graph that shows the various combinations of output that the economy can possibly produce.
(Always in units of other goods) |
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Absolute Advantage
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Ability to produce MORE of a good
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Comparative Advantage
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Low opportunity cost producer.
(Who gives up less of another good to produce good X has less O.C)-Produce more- |
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Gains from Trade
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Trade enables specialization in what we have a comparative advantage in producing.
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Complete specialization
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Comsumption does NOT equal production.
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Bowing of a graph
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Due to increasing opportunity cost.
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