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36 Cards in this Set

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