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36 Cards in this Set
- Front
- Back
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Understand the material
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-only you know what you know
-recognition -know pieces -understand the relation -implications |
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Record what you understand
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-need it later
-begin learning process -check on understanding |
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Move understanding into brain
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-need it for later classes
-tests |
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opportunity costs
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making choices in the face of scarcity; what you sacrifice to obtain something.
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Alfred Marshall definition
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economics is the study of mankind in the ordinary business of life.
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Krugman and Wells
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economics is the study of systems for coordinating society's productive activities.
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Scarcity
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-the core element in economics
-when it is present we must make choices. |
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Economics def.
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economics is the science of scarcity.
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Scientific Meathod of Economics
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1. Select some topics to study
2. make some assumptions 3. create a model or theory 4. test |
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macroeconmics
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bigger of the two national level
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microeconomics
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the smaller of the two focus on individuals
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3 Assumptions
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1. abstraction-get rid of the irrelevant details
2. isolation- look at one thing at a time. 3. rationality- assume people are rational. |
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hypothesis
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an educated guess
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positive economics
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economics that result out of the scientific meathod. descriptive economics tries to explain the way the world works.
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normative economics
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-welfare economics
-value judgment what ought to be |
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production possibilities
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curve or schedule that shows all combos of goods that can be produced using all availiable resources and technology.
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efficiency
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there is no way to make someone better off without hurting someone else.
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Add resources
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1) land-all non human natural resources
2) labor- all human productive activity mental and physical 3) capital- physiacl productive resource |
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capital
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things that you make to help you produce something else later.
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human capital
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productive ability aquired through education and training.
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technology
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all known ways to combine resources to produce goods
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law of increasing opportunity cost
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as you increase production of a good its opportunity cost goes up
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economic systems
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laws,rules, customs that answered these questions
What are we going to produce? How are we going to do it? Who gets it once it is produced? |
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4 types of economic systems
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1. traditional economy
2. command economy 3. market economy 4. mixed economy |
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Demand
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curve or schedule that shows quanitities people are willing to buy at various prices in a given time period.
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substitution effect
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as prices go down this becomes a bargain, so divert money from other things to this.
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income effect
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at lower prices money goes farther you can buy more
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quantity demanded
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amount people are willing to buy at one particular price in a given time period
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shifters for demand
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1. income
2. tastes and preferances 3. prices of related goods 4. expectations of future 5. number of potential buyers |
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inferior good
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more income the less you buy of it
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normal good
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if income goes up you will buy more
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supply
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curve or schedule that shows quantities people are willing to sell at various prices in a given time period
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quantity supplied
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amount people are willing to sell at one particular price in a given time period.
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direct relationship
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as price goes down quantity goes down or vice versa
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Shifters for supply curve
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1. technology
2. input prices 3. expectations 4. prices of alternate goods 5. # of potential sellers |
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equillibrium
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situation with no force or change
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