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26 Cards in this Set
- Front
- Back
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The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
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Economics
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A viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
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Economic perspective
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A resource is considered _____ if it is less available than consumers would like.
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Scarce
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Economic study is divided into two areas:
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Microeconomics and Macroeconomics
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Producers and consumers interacting in individual markets. (Micro or Macro)
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Microeconomics
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Economy wide measures. (Micro or Macro)
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Macroeconomics
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"Other things held constant"
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Ceteris Peribus
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5 Steps to develop the economic way of thinking:
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Develop the ceteris peribus condition
Dont confuse correlation with causation Avoid the fallacy of composition Marginal incentives matter Predicting average behavior |
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Economic practices rely on ____.
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Scientific method
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Involves valued judgements and opinions.
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Normative economics
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Refers to positive scientific statements.
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Positive economics
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True or False: Human wants are considered to be unlimited.
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True
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Factors used by firms in their production process goods and services.
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Resources
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Four classes of resources/inputs/factors of production:
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Land
Capital Labor Entreprunarial Ability |
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Natural resources and the "gifts of nature."
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Land
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Manufactured inputs produced by the economy in order to be used in further production of other goods and services.
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Capital
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The human time spent on production.
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Labor
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The risk-taking / innovative activity on the part of the entrepreneur that puts their resources at risk, runs the business, and makes the non-routine business-policy decisions.
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Entreprunarial ability
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The highest valued alternative sacrificed when a choice is made.
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Opportunity cost
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Shows all possible production tradeoffs between any two goods.
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Production Possibility Curve
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True or False: Operating at a point on the PPC is efficient?
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True
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True or False: All points inside the PPC are attainable but inefficient because some resources are unemployed.
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True
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True or False: All points outside the PPC are unattianable.
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True
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A collection of specific economic units treated as if they were one unit?
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Aggregate
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The need to make choices because economic wants exceed economic needs?
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Economizing problem
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A schedule or curve that shows various combinations of two products a consumer can purchase with specific money income.
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Budget line
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