Econ Exam 1

Front 1

Economics

Back 1

production, distribution, and consumption of goods and services.

Front 2

Microeconomics

Back 2

Branch of economics: How people make decisions and how the decisions interact.

Front 3

Macroeconomics

Back 3

Branch of economics: Overall ups and downs in the economy.

Front 4

Market Economy

Back 4

An economy where the decisions about production and consumption are made by individual producers and consumers.

Front 5

Recession

Back 5

Downturn in the economy

Front 6

Economic Growth

Back 6

Growing ability of the economy to produce goods and services.

Front 7

Invisible Hand

Back 7

The idea that the individual pursuit of self-interest can lead to good results for society as whole. (Adam Smith)

Front 8

Individual Choice

Back 8

The decision by an individual of what to do, which necessarily involves a decision of what not to do.

Front 9

Resource

Back 9

Anything can be used to produce something else.

Front 10

Scarce

Back 10

The quantity available is not large enough to satisfy all productive uses. Ex. Petroleum, lumber intelligence.

Front 11

Opportunity Cost

Back 11

The value of the next best alternative. Ex: The cost of attending the economics class is what you must give up to be in the classroom during the lecture.

Front 12

Trade-off

Back 12

When you compare the costs with the benefits of doing something. "either-or" "how much"

Front 13

Marginal Decisions

Back 13

Decisions to do more or less of an activity.

Front 14

Marginal Analysis

Back 14

Study of marginal decisions. Comparing the costs and benefits of doing a little bit more versus doing a little bit less.

Front 15

Incentives

Back 15

Anything that offers rewards to people who change their behavior.

Front 16

Interaction

Back 16

Choices is a feature of most economic situations. My choices affect your choices and vice versa.

Front 17

Trade

Back 17

Individuals provide goods and services to others and receive goods and services in return.

Front 18

Specialization

Back 18

When each person specializes in the task that her or she is good at performing.

Front 19

Equilibrium

Back 19

When no individual would be better off doing something different.

Front 20

Efficient

Back 20

Takes all opportunities to make some people better off without making other people worse off.

Front 21

Equity

Back 21

Everyone gets his or her fair share. People can disagree about what's "fair," equity isn't as well-defined a concept as efficiency.

Front 22

Equity vs. Efficiency

Back 22

Equity makes life "fairer" for people with disabilities.

Efficiency makes sure that all opportunities to make people better off have been fully exploited by never letting parking spaces go unused.

Front 23

T/F market economies promote efficiency

Back 23

T

Front 24

Focal point of economic inquiry?

Back 24

Individual choice

Front 25

Purpose of a market economy

Back 25

To allocate scarce resources

Front 26

Absolute advantage

Back 26

One country can do it better than another

Front 27

Circular flow model

Back 27

Flow of goods/labor and flown of money

Front 28

Factor markets (LLCC)

Back 28

Market in which films buy the resources they need to produce goods and services

land, labor, capital, human capital

Front 29

Comparative advantage

Back 29

Opportunity cost for producing something is lower for one country than another

Front 30

Positive economics

Back 30

Way economy actually works; economic phenomena

Front 31

Normative economics

Back 31

Way economy should work; value judgements

Front 32

Production possibility frontier

Back 32

Model showing trade offs when producing two goods. Shows max quantity of one for another number of another.

Front 33

PPF graph is curved because

Back 33

opportunity cost rises as more is produced because resources become less suited for its production

Front 34

poits off PPF

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unattainable

Front 35

horizontal axis of ppf

Back 35

quantity of output produced

Front 36

ppf feasable, efficient, unattainable

Back 36

inside is feasable
along is efficient

outside is unattainable

Front 37

result of free trade

Back 37

goods can be produced where opportunity cost is lowest

Front 38

trade not involving money

Back 38

barter

Front 39

two sectors in a circular flow diagram are

Back 39

households and firms

Front 40

What is traded in factor markets? (LLCC)

Back 40

land, labor, capital, human capital

Front 41

moving along points in ppf means

Back 41

resources are directed to different uses because product combinations are changing

Front 42

trade enhances...

Back 42

welfare

Front 43

models are used for...

Back 43

making forecasks

Front 44

saying that all countries gain from trade comes from the fact that...

Back 44

comparative advantage means everyone can consume more; lowers overall costs; all have higher standard of living

Front 45

goods should be manufactured where...

Back 45

opportunity costs are minimized

Front 46

An economy is________ if it exploited all opportunities to benefit someone without exploiting others.

Back 46

Efficient

Front 47

Economy in equilibrium means..

Back 47

Nobody has incentive to change his/her behavior

Front 48

In Market economies... Soi

Back 48

Scarcity, opportunity, Incentive

Front 49

Market failure is when

Back 49

Pursuit of self interests results in bad results for society as whole