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10 Cards in this Set
- Front
- Back
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Economics |
The study of how scarce resources are allocated among competed and unlimited wants |
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Microeconomics |
The study of economic decision making of firms and individuals in a market setting |
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macroeconomics |
the study of the economy in the large |
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scarce |
a good or resource is scarce when the amount available is less than the amount people would want if it were given away free of charge. |
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What are the three economic questions that represent the economic problem |
1. What is to be produced? 2. How is it to be produced? 3. For whom is the output produced? |
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Economic System |
A set of rules that we follow in order to solve the economic problem. |
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The Four Economic Systems |
Tradition Command Market Mixed Economy |
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Market |
Any established mechanism that brings together, on a regular basis, buyers and sellers of goods and services |
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How does the market solve the economic problem? |
1. Business firms - maximise profits 2. Individuals - Maximise Utility (happiness, satisfaction, wellbeing) 3. Individuals are rational. Once decided on a goal, they try to do it as efficiently (with the least cost) as they know how |
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Summary of market allocation |
1. People trade freely. 2. People react to prices. 3. Producers change behavior due to the profit motive. 4. Competition keep producers in line and protects the customers |
