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34 Cards in this Set

  • Front
  • Back
PPF
boundary between goods and services that can be produced and those that can't
ceteris paribus
focus on 2 and hold others constant
production efficency
not being able to produce more of one good without producing less of some other good
-on PPF
oppurtunity cost
highest valued alternative forgone, given up in a tradeoff
-increases as the quantity of that good produced increases
marginal cost
the oppurtunity cost of producing one more unit of a good
-use slope of PPF
-increases as the quantity of that good produced increases
marginal benefit
the benefit received from consuming one more unit
allocative efficiency
when we can't produce more of any good without giving up some other good that we value more highly or producing at a point on the PPF that we prefer over all other points
-point where marginal benefit and cost intersect
economic growth comes from:
technological change and capital accumulation
-PPF shifts to right
comparative advantage
performing an activity at a lower opportunity cost thatn anyone else
absolute advantage
more productive than others
dynamic comparative advantage
comparative advantage that a person possesses as a result of having specialized in a particular activity and as a result of learning by doing becomeing the producer with the lowest opportunity cost
oppurtunity cost of y value:
(1/slope)
oppurtunity cost of x value:
(slope)
scarcity
inability to satisfy all our wants
incentive
a reward that encourages an action or a pentaly that discourages one
economics
social science that studies the choices that people make as they cope with scarcity and incentives
micro
individuals, businesses, market interaction, government influence
macro
national and global economy
4 factors of production:
land-rent
labor-income, wages
capital-interest
entrepreneurship-profit
what tradeoff
choices made by us
how tradeoff
choices made by businesses
for whome tradeoff
depends on buying power
fallacies
errors or reasoning that lead to a wrong conclusion
fallacy of composition
the false statement that what is true of the parts is true of the whole or that what is true of the whole is true of the parts
post hoc fallacy
the error of reasoning that a first event causes a second event because the first occurred before the second
positive statement
what "is"
-can be tested
normative statement
what "ought to be"
-cannot be tested
2 big economic questions:
1-what, how, and for whom goods are produced
2-when does self-interest promote social interest
time-series graph
measures trends
cross-section graph
shows the values of an economic variable for different groups or categories at a point in time
scatter diagram
shows relationships
capital
anything used to produce goods and services
-determines quality of labor
entrepreneurship
human resource that organizes labor, land, and capital
human capital
knowledge and skill obtained from training, experience, etc