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14 Cards in this Set

  • Front
  • Back
normative economics -
"what should be", Opinions
Economics -
Social science concerned with the efficient use of scarce resources to maximize satisfaction of unlimited human wants. The fundamental economic problem is one of scarce resources relative to human wants. Such scarcity can never be eliminated; it implies we must make choices
Macroeconomics –
the study of economics as a whole or its basic aggregates such as the business, household, and government sectors.
microeconomics –
the study of specific economic units such as particular firms, households, or markets, studies how supply and demand determine prices in individual markets
marginal benefit & cost analysis –
extra, additional, movement form one situation to the next, maximized when MB=MC, MC should never exceed MB
positive economics
- "what is", "what will be", Factual, non-judgmental
complementary good
– two products, for which an increase (or fall) in DEMAND for one leads to an increase (fall) in demand for the other.
normal good
- A good for which an increase in income causes an increase in demand, or a rightward shift in the demand curve, income rises the purchase of normal goods will increase, goods for which demand increases as income increases
inferior good
– is a good that when income increases, purchases of the inferior good decrease and as incomes fall, purchases of the inferior good increase, demand shifts to the left when income increases, quantity demanded and income move in opposite directions, all else equal
allocative efficiency
- means that the goods and services produced are the combination most desired by society
- lead to efficiency, provide Incentives such as Income and Profits
productive efficiency
- means that the goods and services are produced in the least costly fashion
Increasing marginal opportunity costs
As more of one good is produced, more and more of the other good must be sacrificed. Seen in the slope of the production possibilities curve, it is concave to the origin. Economic resources are not completely adaptable to alternative uses
substitute good -
Goods for which an increase (or fall) in DEMAND for one leads to a fall (or increase) in demand for the other.