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19 Cards in this Set
- Front
- Back
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Economics |
The study of how scarce resources are allocated to meet unlimited wants and needs |
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there are two types of economic branches, what are the two types? |
1. Macroeconomic examines the behavior of the whole economy 2. Microeconomics examines the choices of individuals concerning one product firm or industry |
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What is scarcity? |
Productive resources are limited, people cannot obtain all that they want they must make a sacrifice or pay costs. It is therefore the combination of limited resources while hubby unlimited wants and needs. Scarcity forces us to choose among alternatives |
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What are choices? |
Choosing amongst alternatives creates an opportunity cost. |
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What is an opportunity cost? |
Is the value of the next best thing choice, what you can no longer do because you did what you did. |
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What can higher or lower opportunity cost people to do? |
Higher or lower opportunity cost can cause people to change choices |
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What is rationality? |
Individuals maximize making their choices. |
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What does maximization imply |
The individuals use marginal analysis |
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Marginal benefits compared to marginal cost |
Marginal benefit is greater than marginal cost because it adds more, marginal benefit Is marginal cost because it subtracts more |
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Scarcity causes goods and services to be? |
Ration somehow rationing method |
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Merit or need? |
Arbitary age hair color shoe size |
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Price is? |
The market system, consists of lottery auctions share equally elected or appointed a decision maker |
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Advantages of a price system? |
Participants may not know each other's characteristics, market provide severity, computer relative prices, common currency equals no questions or value, individual choice to participate |
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Problems with price system? |
Asymmetric information, needs facts to define individual benefits, external benefits and costs are ignored |
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What is a Market ? |
A market is a network of buyers and sellers exchanging goods and or services of terms of trade. Price quantity quality delivery |
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Market Economy |
INDIV make choices and decisions of what to produce how and how much |
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Command economy |
Govern makes all economic decisions of what to produce and hot |
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Traditional Economy |
Tradition custom Dictate answers to economic questions |
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Mixed economy |
Most economic systems are not true forms of any one type of economic systems but a combination. |
