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15 Cards in this Set

  • Front
  • Back
-The study of scarcity

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