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32 Cards in this Set
- Front
- Back
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How people fill their unlimited wants in a world where resources are scare.
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Economics
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4 Categories
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1.) Land
2.) Labor 3.) Capital 4.) Entrepreneurial Ability |
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Physical or mental effort used to produce a good or service
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Land
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Physical or Mental effort used to produce a good or a service
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Labor
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Buildings and equipment with skill used to produce goods or service
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Capital
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Physical Capital
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buildings, machinery, or factories.
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Human
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skill and knowledge used to enhance productivity.
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Entrepreneurial Ability
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organization and managerial skills used to start a firm combined with the willingness to take risk.
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scarcity exist when
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Demand is GREATER than Supply when the Price = $0
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Scare Resources
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1.) Land
2.) Labor 3.) Capital 4.) Profit (revenue - cost) |
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Market
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A place where buyers/sellers come together to carry out a mutually beneficial exchange.
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Scarce Resources
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Land -> rent
Labor -> wage Capital -> Interest Entre -> profit ability |
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What does scarcity do to the economy?
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Scarcity drives economics!!! Choices must be made...
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Decision Makers
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1.) Households
2.) Firms 3.) Government 4.) Rest of World (ROW) |
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Households
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Own ALL resources and demand goods and services.
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Firms
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Demand resources from households in order to produce goods and services.
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Government
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Demand resources from households in order to produce goods and services
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Rest Of World (ROW)
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demand resources from households in order to produce.
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2 Market Places
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1.) Product Market
2.) Resources Market |
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Marginal Cost vs. Marginal Benefit
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Marginal Benefit= Marginal Cost is when research is done because you don't want Marginal Cost is GREATER than Marginal Benefit.
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Opinions about the way "things should be"
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Normative Economic Statements
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Positive Economic Statements
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Factual Statements!!
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Pitfalls of Economic Theory
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1.) Association is Causation
2.) Fallacy Of Composition 3.) Ignoring Secondary Effects |
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Because two events occur at same time doesn't mean one caused the other
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Association is Causation
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What is true for one is NOT necessary true for all
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Fallacy of Composition
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Unintended consequences of an economic decision that develops slowly overtime.
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Ignoring Secondary Effects
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Choices
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Every choice has a cost
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Opportunity Cost
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Value of the next best alternative forgone when a decision is made...
WHAT YOU MUST GIVE UP TO GE WHAT YOU WANT!!!! |
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Sunk Cost
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A cost that has already been incurred should be irrelevant to all decisions. CANNOT BE RECOVERED!!!
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What is the greatest restraint?
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TIME IS THE GREATEST RESTRAINT!!!
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Micro Economics
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Study of Economic behavior in particular markets...
individual decisions.. production decisions by firm... |
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Macro Economics
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Study of Economic behaviors in economies as a whole.
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