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31 Cards in this Set

  • Front
  • Back
Define economics
study of how society experiences virtually limitless wants
What is a resource
anything used to produce a good or service
What is a good
any tangible thing that people want
What is a service
any intangible thing that people want
Define scarcity
the amount of resources available at any point in time
What are the three factors of production?
land, labor, capital
What does land comprise of?
any natural resource
Define human capital
skills and abilities that people get from education, training and experience
What is financial capital used for?
the purchase of physical capital
How do we know these resources are scarce?
because they have a price
Wants are unlimited except in what sense?
strict material
What is micro?
study of choices by consumers and the study of choices by firms/producers
We assume that people act in
rational self interest
Define rational self interest
people don't act randomly
What is macro?
study of the economy as a whole
Define econometrics
the analysis of economic trends using statistics
Why study micro economics?
allows you to understand business decisions and consequences
When two lines on a graph meet, the two variables are
not equivalent
What is a market economy
choices made in private markets
What is a market?
a collection of buyers and sellers exchanging goods, services or resources
We are studying what form of government
Pure capitalism
What does pure communism mean?
Government makes nearly all economic decisions and owns all productive resources
What does pure capitalism mean?
Most economic resources are made in private markets and productive resources are privately owned
What is are the four market structures?
perfect competition, monopolistic competition, oligopoly, monopoly
What is the function of markets?
to facilitate the exchange of goods
What are the three types of income?
labor, land, capital
Why do we need money?
Without money we would have to barter for everything.
What is opportunity cost?
The highest valued alternative forgone in making a choice.
What is marginal cost?
The additional opportunity cost of producing one more unit.
What is the law of increasing costs?
If output increases MC increases
What is comparative advantage?
Ability to produce something at a lower opportunity cost than someone else