Chapter 1: The Central Concepts of Economics Flashcards

1
Q

What are the twin terms of economics?

A

Scarcity and efficiency.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is economics?

A

Economics is the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is the availability of economic goods?

A

Economic goods are scarce and are not free.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Economic efficiency:

A

Economic efficiency requires that an economy produces the highest combination of quantity and quality of goods and services given its technology and scarce resources.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Post hoc fallacy:

A

The post hoc fallacy (after this therefore because of this) fallacy is based upon the mistaken notion that simply because one thing happens after another, the first event was a cause of the second event. Post hoc reasoning is the basis for many superstitions and
erroneous beliefs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Fallacy of composition:

A

The fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some part of the whole.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the main goal of the economic science?

A

The ultimate goal of economic science is to improve the living conditions of people in their everyday lives.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Command economy:

A

Directed by a centralized governmental control.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Market economy:

A

Guided by an informal system of prices and profits in which most decisions are made by private individuals and firms.
Extreme case: laissez-faire economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the reality of countries concerning the type of economy?

A

In reality, all societies are mixed economies with different combinations of command and market economies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Positive economics:

A

Questions can be resolved by reference to analysis and empirical evidence.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Normative economics:

A

Involves ethical precepts and norms of fairness. They can be resolved only by political debate and decisions, not by economic analysis alone.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Inputs:

A

Commodities and services that are used to produce goods and services → factors of production: land, labor, capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Outputs:

A

Various useful goods or services that result from the

production process and are either consumed or employed in further production.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the 3 economic problems?

A
  1. what outputs to produce, and in what quantity;
  2. how (with what inputs and techniques) to produce the desired output;
  3. for whom the output should be produced and distributed;
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What does the production possibility frontier (PPF) show?

A

The ProductionPossibility Frontier (PPF) shows the
maximum quantity of goods that can be efficiently produced by an economy, given its technological
knowledge and the number of available inputs.

17
Q

What does the production possibility frontier represent?

A

The PPF represents the menu of goods and services available to society.

18
Q

What is an opportunity cost?

A

In a world of scarcity, choosing one thing means giving up something else. The opportunity cost of a decision is the value of the good or service forgone.

19
Q

When does a productive efficiency occur?

A

Productive efficiency occurs when an economy cannot
produce more of one good without producing less of
another good; this implies that the economy is on its
productive-possibility frontier.