1 Flashcards
What is scarcity?
Unlimited wants exceed limited resources
What is economics?
The study of choices people make to attain their goals given scarce resources (micro is individuals, macro is a whole)
What is opportunity cost?
The cost of the next best thing you could be doing
What are the 3 questions every society must answer?
WHAT are we making
HOW are we making
WHO are we making for
What are the 3 ways to organize an economy? (examples)
Tradition: Families
Command-based: USSR
Markets: US
4 main economic super sectors?
Agricultural
Goods producing
Service providing
Governmental
Goods vs. services? (examples)
physical vs. like a service?
What is a durable good vs. nondurable good?
Durable goods>=3years
Nondurable goods<3years
According to Adam Smith people are motivated by what?
Fame, power, reputation, sex, love
What are incentives?
Rewards and penalties that motivate behavior
What types of institutions, laws, and economic or political conditions are conducive to economic growth?
Taxes, subsidies, regulation, property rights, political stability
What is inflation?
Increase in general prices
An increase in the supply of money without increase in goods
What are economic booms and busts?
Upturn or downturn in economy
What is does “thinking on the margin” mean?
Make choices by considering consists of a little more or less
What is the relationship between economic growth and well-being?
Positive correlation
