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23 Cards in this Set

  • Front
  • Back
social science
The study of society and the way individuals interact within it.
The study of how society employs its finite resources in the attempt to satisfy infinite wants
The study of individual economic units such as households and firms
The study of the economy as a whole (eg. inflation)
Economic growth
An increase in real GDP or an increase in the quantity of resources
Economic development
A qualitative measure of a country's standard of living which takes into account numerous factors such as health and education. The Human Development Index is normally used to measure a country's economic development
Sustainable development
The rate at which a country can develop without compromising the needs of future generations
Normative Economics
Based on opinion. Uses words such as should. Eg. The government should make fixing unemployment its number one priority.
Positive Economics
Based on testable theories. For example, a hike in interest rates leads to a fall in aggregate demand can be proven using data.
Ceteris Paribus
Latin for all things being equal. Since economics is the study of society, we have to understand that there are thousands of variables present, and to control each one of these variables is downright impossible. Thus we make everything else "ceteris paribus" in order to see the effect of one aspect.
is the observation that no resource is infinite.
unlimited wants + limited resources / factors of production = relative scarcity
Factors of production
are basic components or inputs which are required in the production of goods and services.
Gifts of nature, this includes everything on the land, under the land, above the land, or in the sea. Oil is an example.
The human component hired to assist in producing a good or service.
products deliberately made for the purpose of producing other goods / services
Combines the other factors and takes risks recognizing the possibility of gain from employing these factors in a specific way.
Factors of Payment (FoP):
Land: Rent
Labour: Wages
Capital: Interest
Entrepreneurship: Profit
The satisfaction gained from the consumption of a good or service. The demand curve slopes downward because of the law of diminishing marginal utility. The marginal utility, or extra happiness, we gain from buying an extra ice cream decreases with every ice cream we buy at a fixed price.
Opportunity cost:
The cost of the next best alternative forgone. If I have $5.00 and can either buy a tamogotchi or dinner, and I buy the tamogotchi, then the opportunity cost is the dinner I could have bought.
Free good
A good with no scarcity, that has unlimited supply and therefore no price. A good which has no opportunity cost associated with its consumption.
Economic Good:
A good which is scarce and therefore has a possible opportunity cost.
production possibility curves
a curve showing the maximum potential output of an economy given that: the economy makes only 2 goods
What are the basic economic questions
What to produce?
How to produce it?
For whom to produce?