Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

21 Cards in this Set

  • Front
  • Back
The study of decisions

one thing affects the other

i.e. environment & pollution; increase in production leads to the decrease in environmental value.

Opportunity Cost

What you give up in order to have something else.

It is what you do not have because you have something else.

-Money is NOT an opportunity cost

Supply & Demand

Supply: the amount of the good that sellers are willing and able to sell.

Demand: the amount of the good that buyers are willing and able to purchase.

(also know how to draw the graph)

Cost-Benefit Analysis
Choosing to do something if the benefit is greater than the cost.

When an individuals actions and transactions affect the well being of some additional 3rd Party.

The individual doesn't feel the costs of their benefit; The price does not reflect the whole cost.

~Can be positive or negative


Cost: a negative externality; the cost of an economic activity that is shifted onto society.

Benefit: a positive externality; economic benefit shifted onto society.


GDP- Value Produced

GNI-Value earned

-Both are national measures of wealth and production

-Per capita is for standard of living calculations (poverty)

Environment and Production

Environment provides value & Production provides value. We have to look at the cost and benefit of each.

(know how to draw the graph)

World Poverty

-living on $1.90 per day

-900 million or 13% in poverty

-Many ways to measure:

health care, income distribution, education, political stability, etc.

Fighting Poverty

-Increasing infrastructure (the government)

-Increasing productivity (farming)

-Decreasing corruption (political/governmental)


-Financed by the government, vouchers, and taxes

-different externalties;

incentives to cheat

y = f ( L, N, K, H)

Y= the national output or amount of goods a country produced; influenced by all of the resources in this equation.

L= Labor (hours)

N=Natural resources

K= Physical capital (machines, buildings)

H=human capital (brains)


-Cost/Benefit analysis of owning vs. renting

-home apprectiation = 4%

-maintenance costs= 2.5%

Subprime Mortgage Crisis

-More people bought homes that couldn't afford them; since they couldn't afford them they eventually lost their homes.

-This caused demand for homes to decrease and prices to decrease, causing issues for banks as about 1/3 of homes foreclosed.

(know the graph)

Rent Control

Prices cannot be higher than a specific point.

-Price Ceiling: max amount.

-Leads to shortages; less apartments available, low maintenance, and an increase in discrimination.

-Keeps housing cheaper, but has costs ^

Public Housing

-Government funded or subsidized housing
Pros and Cons, Trade offs:

-lazy, crime, poverty, dysfunction, addiction


-Constrained vs. Unconstrained (think of triangles)

-$2.9 trillion dollars benefits and cons


Risk Averse: People who are wiling to pay $$ to avoid risk

BIG PART of the Affordable Care Act (Obamacare)

Diminishing Marginal returns

-You value $100 more than Bill Gates (look at graph)

-You want to be at the 50/50 of your happiness.

Affordable Care Act (Obamacare)

-Universal Health Care for everyone


-requires everyone to pay

-preventative care

COSTS (to companies and individuals)


BENEFITS (who has insurance)

-Is this equitable AND efficient?

What this is trying to do, but can you do both?

-Now everyone has insurance and is taken care of. IS HEALTH CARE A RIGHT?