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16 Cards in this Set
- Front
- Back
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Notes about these flashcards
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the general concept is given or asked on the front and a basic definition is given on the back. If you have questions about the ideas here you should ask your professor or your TA.
When a definition is followed by a number in parenthesis this means that this is the page in the book where the idea is discussed. the book used for these flashcards is Samuelson and Nordhaus, 8th edition. |
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what is economics
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the study of how scarce resources are used by societies to produce the things they need, and how these things are distributed among people. (4)
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What is scarcity?
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limited quantities of resources to meet unlimited wants
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When is an economy producing efficiently?
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We say that an economy is producing efficently when it can not make anyone economically better off without making some else worse off.
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What is the difference between macro and micro economics?
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Microeconomics looks at the behaviors of individuals, where macroeconomics looks at the behaviors of whole economies.
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Who is John Maynard Keynes?
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He's an important economist who developed macroeconomics. He wrote General Theory of Employment, Interest and Money in 1936.
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What is the post hoc fallacy
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It's an error in reasoning that occurs when we assume that just because one thing happened before another the first event caused the second.
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What is meant by failure to hold other things constant?
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Economists look at economies where lots of things change at the same time. In order to study the effect of a behavior on an economy we isolate it by assuming that the only thing changing is that behavior. When we don't do that we have a failure to hold other things constant. It means we can't always identify the exact cause.
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What is the fallacy of composition
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It is the assumption that what is true of a part is true of the whole.
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What is the difference between positive and normative economics?
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Normative economics talks about issues of equity (fairness). Positive economics deals with facts and data and evidence even though the facts and data might not be equitable.
(7) |
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What are the problems that economics seeks to answer?
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Economics looks at questions about how goods are produced, what goods are produced, and for whom the goods are made.
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What are inputs? What are the three general types of inputs.
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Inputs are commodities that are used to produce goods and services.
There is land (natural resources), labor (human energy expended), capital (the durable goods of an economy. Examples of this would include computers, buildings, bulldozers and sewing machines). |
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What is a production possibility frontier?
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It's a curve that shows the combination of goods and services that an economy can produce. The textbook answer is that the graph "...shows the maximum amounts of production that can be obtained by an economy given its technological knowledge and quantity of inputs available." (11)
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What is opportunity cost?
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Opportunity cost is the idea that because we have scarce resources in order to use a resource for one thing you can't use it for something else. The opportunity cost is the cost of the next best alternative use of a resource.
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What is productive efficiency?
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Productive efficiency occurs when an economy can not produce more of one good without producing less of another.
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If an economy is operating under productive efficiency what can be said about its PPF?
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If an economy can not produce more of one good without producing less of another the combination of goods it is producing must be on the production possibilities frontier curve. (13)
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