Ch 1 & 2 Flashcards
economy
A system in which scarce resources are allocated among competing uses
market economy
A system in which production and consumption is a result of decentralized decisions by many private firms and individuals
What are the main characteristics of a market economy?
Self- interest and incentives
Prices and quantities
Institutions
economics
Usage of scarce resources to satisfy unlimited human wants
Factors of production
Human capital and labour
Land and natural resources
Physical capital
Opportunity cost
The monetary and non-monetary costs of using resources for a particular purpose measured by benefit forgone
Production possibility frontier
Curve showcases which alternative combinations of commodities can be attained if resources are efficiently used
What 3 economic concepts does a prof model shows
Scarcity, choice, opportunity cost
What is the original shape of pod boundary
Concave
What characteristics does production display which are mentioned by Adam smith?
Specialization of labour and division of labour
Comparative advantage
Country specializes in producing particular output that yields lower opportunity cost than other countries
Absolute advantage
Ability of a country to produce a larger quantity of output than others using the same amount of resources
Money
A financial resource eliminates the system of barter by separating transactions involved in exchange of products
Positive economics
Definite right or wrong answers
Normative economics
How the economy should or ought to world. No right answers and based on value judgements
